Obviously, Expedia got its wires crossed with both the Hostel Tamarindo Backpackers and Dollar. In a big way.
Expedia should have made sure that you had a confirmed reservation with the hotel and not just a rental car, but also a rental car at the rate it promised you.
Expedia should have fixed this problem while you were still in Costa Rica, finding you a room and a rental car. I’m disappointed that it didn’t. By the way, you did the right thing by phoning Expedia. You needed a real-time resolution, but unfortunately you didn’t get it. After that, corresponding with Expedia by fax and email worked better, because you had a much-needed paper trail.
In the future, you might want to contact the hotel and car rental company directly, even if you have a confirmation from your online travel agent. Just to be safe.
Fortunately, this type of glitch appears to be very rare. I contacted Expedia on your behalf, and it reviewed your case again. Its records show that a refund of $455 was already in process. I’m happy that Expedia eventually did the right thing without having to be asked.