Are false wear-and-tear claims a “profit center” for car rental companies?

Reviews for the German car rental agency Sixt on the online review sites Yelp and TripAdvisor fall into two distinct categories. One category consists of four-star and five-star reviews, loaded with praise for the professionalism of its staff and the excellence of its cars. These reviews are the ones Sixt itself touts on its website.

But after a bad experience with Sixt last year, Bart Shachnow noticed that there are a lot of reviews of the other type — one-star and zero-star — and probably wanted to leave a review of his own. Many of the reviews indicated that Sixt has a reputation for pursuing its customers for wear-and-tear damage claims. Car rental companies, for whom damage claims can be significant sources of profit, don’t like to discuss those claims.

Shachnow rented a car from Sixt in Munich. When he arrived to pick it up, he was told that it was not “road ready” and had not been properly inspected. He was offered another car, and being in a hurry to reach his destination, accepted it.

According to Shachnow, “there was never any walk-around or car condition check conducted by Sixt at the originating rental agency, nor did they offer any paperwork for me to check for any damages.” He took photos of the car “simply out of an intuitive sense that they were not trustworthy.”

His instincts were right.

When Shachnow returned the car in Vienna a week later, Sixt did not inspect the car at that time. Three days later, however, Shachnow received an email from Sixt claiming that Shachnow caused $3,000 of damage to the car, including scratches to the bumpers, spoiler, and aluminum rims, as well as a missing tire air compressor. Shachnow forwarded to Sixt his photos of the car that showed no damage.

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Sixt refused to back down. It responded:

We are checking our cars after every return according to a station-wide homogeneous standard. By doing so we have noticed a new damage after your return (which are also seen in the pictures you sent).

You have confirmed the condition of the rental car described on the rental agreement before takeover. If you notice new damage you have the obligation to inform us before takeover according to our contractual agreement. We have checked our papers once again and can unfortunately find no evidence for such information.

After revision of all given information and your objection we have to inform you that the damage must have occurred during your rental period. Therefore we kindly ask for your understanding that we have to insist on compensation of our claimed indemnity.

As a “gesture of goodwill,” Sixt extended the timeline that they were giving Shachnow to pay the claim.

Shachnow demanded that they show him photographic evidence of their own in proving their claim. Sixt forwarded photos of its own, as well as a chart of the car with areas circled, where it alleged that Shachnow had caused damage.

At this point Shachnow contacted our advocacy team for assistance.

Sixt’s Terms and Conditions are unambiguous:

The lessee undertakes to treat the vehicle appropriately and with due care, to observe all the regulations and technical rules which apply to its use, especially to check regularly that the engine oil level is sufficient and to observe when vehicle services are due and to check regularly that the vehicle is in a roadworthy condition and to properly lock the vehicle. The lessor’s vehicles are non-smoking vehicles in principle….

If ever the vehicle is damaged during the rental period the lessee is obliged to notify the lessor in writing and without undue delay of all of the details of the incident which led to the vehicle being damaged. For this purpose the lessee should complete all of the points on the form for reporting an accident, which can be found with the vehicle papers, carefully and truthfully. The form can also be requested from the lessor at any time by telephone or can be downloaded from the lessor’s websites.

The lessee or driver must take all measures, which are expedient or conducive to clearing up the case of damage. This particularly includes them having to answer the lessor’s questions concerning the circumstances of the case of damage truthfully and fully and them not being permitted to leave the scene of the accident until it has been possible to make the necessary findings and particularly the findings that are of importance to the lessor for assessing the damaging event or without allowing the lessor to make such findings….

In the event of damage to the vehicle, loss of the vehicle or breach of the rental contract, the lessee shall be liable, in principle, in accordance with the general rules governing liability. In particular, the lessee must return the vehicle in the condition in which he took possession of it.

So if Shachnow had actually caused damage to the car to the tune of $3,000, yes, he would be responsible for paying that much to Sixt.

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But the damage didn’t occur while the car was in his possession. And as Shachnow realized from reading the online reviews, Sixt has a tendency to extract exorbitant payments from its customers for normal wear-and-tear to its cars — so much so that this behavior serves as a “profit center” for Sixt.

This story does have a happy ending. After our advocacy team got involved, Shachnow received a letter from Sixt advising him that “After reviewing all given information … we waive the damage compensation.”

Do car rental agencies use false wear-and-tear claims as a “profit center”?

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Jennifer Finger

Jennifer is the founder of KeenReader, an Internet-based freelance editing operation, as well as a certified public accountant. She is a senior writer for Read more of Jennifer's articles here.

  • MarkKelling

    Of course car rental companies profit from their damage claims. Why else would they make so many claims to the renters? If the majority of those claims were not false, why are they so willing to drop them after someone like Mr Elliott gets involved?

    Now I’m not implying that every damage claim is false because damage does occur to all cars at one time or another. And if the damage occurs while you are renting the vehicle you are responsible for it even if it happened when the car was parked and you were nowhere around it. It is part of the responsibility you take on as renter. But since I have been the victim of a false damage claim, I know it happens. How do I know it was a false claim? I rented a car from the same location of a major rental company twice over a six week period. I got the same car both times that had unmistakable preexisting damage. Both times the company tried to bill me for the same damage! Luckily I had filled out scratch and dent form both times so I had proof I did not cause the damage. If they are dumb enough and greedy enough to try and charge the same person twice for the same damage, you know they have to be repeatedly charging multiple renters for the same damage hoping they will pay.

  • AJPeabody

    By definition, false damage claims can only be for profit. profit by deception and theft, that is.

  • MF

    This is exactly my concern, that rental car companies are flagrantly committing fraud by repeatedly billing different customers for the same damage on the same car over & over. Why are they not prosecuted for their egregious conduct?

  • pmcw

    Sadly, it is necessary to take pictures before you leave the rental lot and pictures when you return the vehicle. Always be sure to capture enough background so it’s clear where the pictures were taken. Also, always keep the pictures for a few months or so – I received and quickly successfully disputed a claim from Enterprise with that practice.
    Setting aside the Enterprise claim, which was actually more a misunderstanding on the part of Enterprise than an attempt to mess with me, the only time I had a problem was in Costa Rica. That was before cell phone cameras and my bet is I wasn’t the first renter to pay for a small chip in the windshield of the Land Cruiser I rented.

  • Nathan Witt

    I almost always assume that the rental company is lying at this point. That said, there are a couple of things about this case that make me wonder:

    1) It’s not clear from the story, but it sounds like Mr. Shachnow has photos of the car at the time he picked it up, but not at the time of return, which might demonstrate that the damage was preexisiting, but the story mentions that he forwarded Sixt photos that showed no damage. Maybe they were taken at the time of return, and my reading skills need sharpening.
    2) Sixt contacted the renter after 3 days. This seems consistent with them noticing the damage promptly and beginning the claims process. If it were several months, I’d wonder, but the prompt turnaround at least lessens the chances that it was a Sixt employee or a subsequent renter that caused the damage.
    3) When asked, Sixt provided photos of the damage. It’s not really damning evidence, but you at least know the car was damaged enough to photograph it, and that someone at Sixt is keeping track of the claims and responding to challenges.

    I’m glad you advocated for this guy, and I’d want a pretty high burden of proof on the rental company if it were me being accused of damaging a car, but this one does kind of make me unsure…

  • RightNow9435

    Right, something like what they tried to do to Mark is basically fraud. They definitely should be prosecuted.

  • Joe_D_Messina

    Fair points. Only thing I would question somewhat is the part about whether we actually KNOW that particular car was damaged. They apparently have pictures of a damaged car, but rental places have many cars that are virtually identical so after-the-fact who can really tell?

  • taxed2themax

    Here’s the thing for me.. I recognize that we’re talking about a rather expensive (expensive being subjective of course) item that is being rented out to someone and with limited (not “no”, but limited) recourse to repayment if the asset isn’t returned.

    Are there cases where damage is intentionally misrepresented by the rental company, and done for their economic gain? I’m totally sure there are.. On the other end, are there cases where a car is legitimately damaged by a renter and intentionally misrepresented to avoid economic costs? I’m also totally sure there are.. and for me, neither is ‘right’ … and because one side does or may do it, does not then make it somehow OK, for the other side to then do the same.

    Do I personally think any company does this — and the “this” I speak to is intentionally and willfully misrepresenting damage for economic gain? I don’t think so… I do think that perhaps at the local level, like front-line agent or even location manager, may feel the pressure to meet some level of revenue or the like.. and in pursuit of those goals, may choose to go this route… but I personally don’t think any company has, as a matter of policy, written or not, to intentionally misrepresent claims for profits.

    Now, a separate but related issue to me is the question of “how hard” or close does ABC company look at, record and go after renters for damages.. here is where I think companies could and should be more clear as to expectations… Again, we’re talking about (in many cases) an asset with a value in the 10’s of thousands of dollars.. I think the rental agencies should be quit clear on how and what they will consider to be damage.. and along with that, I think they really should be set up, operationally, to conduct an inspection on the car at the time of return.

    I cede that this will in most cases, slow down the rental process.. but for me, I am uncomfortable with doing this whole return-inspection process after-the-fact because it opens the door to either side abusing the process – be that a company falsely reports damage… or the consumer falsely denying damage to avoid payment,

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