The car rental industry’s day of reckoning may be close

By | December 20th, 2012

Ilya Alkishin/Shutterstock
The car rental industry is in trouble. And this time, it can’t be fixed by quietly settling out of court with its customers or lobbying a few state lawmakers.

Maybe you’ve seen the recent TV report about the allegedly bogus damage claims filed by Budget against its customers in Canada. You’ve probably said to yourself, “A-ha! I knew they were doing that!

So are a lot of other people.

But why do I think this time is different from all the other times the industry has gotten away with a slap on the wrist?

Walter Bird, that’s why.

Bird rented a Lincoln Towncar from Budget at the Toronto Airport in April. No one offered to do a pre-rental walkaround, and no one was available to inspect the car, he says. They just handed him the keys.

When he returned the car undamaged to Budget, same thing — no one looked at the car.

“The lady at the rental desk just asked me for the mileage,” he says.

You probably know what happens next, don’t you?

Several weeks later, I received an envelope from Budget. Enclosed was an estimate for a new tire, and a copy of a credit card billing for the new tire, charged against my credit card, for a total of $154. I did not receive a cover letter or anything to explain what happened, or why they charged my credit card.

Bird maintains that there was no damage to the car and that Budget sent the wrong customer the bill. Indeed, the mileage and rental rate didn’t match his, and he can’t see his own signature on the bill Budget provided.

Related story:   A few minutes late to the airport cost her hundreds of dollars -- is this right?

I get cases like Bird’s all the time. So why is this one so persuasive?

Because it happened 17 years ago. That’s right, Bird rented the car in 1995, and he’s still fighting.

“There has to be billions that have been made from fraudulent repairs,” he says. “Now, someone is doing something about it.”

I don’t know what will happen to Bird’s case, but if he’s still pushing for justice 17 years later, I have to assume there are others. It only takes a few to make this the car rental industry’s worst nightmare in 2013.

I hope Canadian authorities conduct a full investigation, and that the United States follows up with one of its own. I’m afraid there is much to be discovered.

It’s too late for me to help Bird — too late by about 16 years — but I’m going to be following this issue closely in 2013 and I’m following up with a bigger story in January.

By the way, be sure to click back here this afternoon for part one of my interview with Allison Ausband, Delta’s head of customer service.

Does the American car rental industry have a repair fraud problem?

View Results

Loading ... Loading ...

  • sirwired

    Whether or not they have a major problem, they certainly aren’t doing themselves any favors by continuing to do things like file damage claims well after turn in, or not taking high-resolution pictures of every car before it leaves the lot.

  • Budget is the WORST and I will never ever rent from them again!

    Also a good idea to check to see what protection you have from your credit card and personal insurance always domestic and international!

  • EdB

    I found it hard to really vote on this one. “Does the American car rental industry have a repair fraud problem?” I don’t think the car rental industry itself has a problem. From what I have read on here, it is just one, Enterprise, with a corporate wide problem and several franchises that are causing the problems. I’m just hoping in the end, something is done, and quick, about this.

  • Steve Rabin

    I’m not sure it is strictly the rental car companies themselves, but their franchisees, some of whom are less than scrupulous…and trying to recoup whatever they can from whomever they can soak for the so-called damage.

  • bruceincharlotte

    I’ve been fortunate to have rented dozens of cars and I’ve never had a problem with any of them. This year, I rented so many from National that I am now “Executive Elite.” Yay, me.

    But I still prepare for problems – I never choose a car that has damage and when I return the car, I take a half dozen digital pictures of the car, at every angle and especially the windshield. Because I’ve learned from reading your columns that mistakes happen (intentional or otherwise, I’m not saying). Be prepared.

  • Raven_Altosk

    Exactly what Steve R said. It’s the franchisees who are often to blame. I swear the owners offer incentives to their workers to find “damage.”

    I encountered a very “enthusiastic” young lady working at a rental company I no longer use at all costs. While I was picking up the car and she was trying to “upsell” me the ridiculous insurance, she kept asking me what my deductible was. I told her “You don’t need to know that.” She became increasingly frustrated with me and even at one point told me I couldn’t have the car until I gave her this information. I finally said, “It’s enough for me to know and you not to worry about, sweetness.”

    BUt yeah, that smelled of SCAM. And it was Enterprise!

  • Extramail

    You have to wonder, with today’s technology, why the rental car companies haven’t installed some sort of camera system to take pictures of the cars as they leave the lot. If the police department can install cameras at traffic lights . . . You’d have to think its because they would lose a lot of “ancillary” income. It was mentioned in a recent Elliot article that the airlines is not a profit- making business model. Looks like neither is the car rental business.

  • Bill___A

    Years ago, I had a rental car from Holiday Car Rental. The windshield had a pressure crack while the car was in my possession. The car was parked when it happened. They wouldn’t talk about it and I wasn’t equipped to pursue it further at the time, but I can tell you that their business, their owners’ business and their suppliers have lost thousands of dollars over this $200 event.

  • SoBeSparky

    While the poll question speaks of the domestic car rental “industry,” this does not necessarily apply to all members of that industry in the U.S.

    I rent only four or five times a year, year after year, and usually from Hertz. They have told me on more than one occasion, “We do not nickel and dime you to death.” When I ask about an inspection, they cheerfully agree to accompany me on a walk-around. I am not dinged (pun intended) by harassing post-rental charges.

    I avoid franchise locations like the plague, mostly because their rates are much higher.

    What I have complained about recently are the aged cars I get, the last one being two years’ old with over 46,000 miles. Post-rental, I told them orally and in writing that my expectations were better than a Rent-a-wreck.

  • Crissy

    My brother in law had rented a car a few years ago, not sure which company, and got a bill for about $500, he fought it and the company pretty quickly and quietly went away. I must admit that my distrust of the car rental companies makes me consider vacation options that do not include car rental when possible.

  • tomjuno

    If I can possibly avoid renting a car nowadays, I will. It makes little difference to me who is at fault for these outrages, either the parent company or the franchisee. Any parent company that so sloppily selects its franchisees, risks tarnishing the entire brand. When I complained to the parent company of the Payless brand a few years ago about the antics of its Las Vegas airport franchise, I was brushed off with the so-called explanation that its franchisees are independent operators and, by inference, therefore not accountable to the parent company. As if such an answer explains it. I haven’t rented from any Payless brand since.

  • BlondieDC

    Enterprise in downtown Chicago asked me what my insurance deductible was, too. I told the man, “None of your business!” It is fair that they know who you have insurance coverage with, but your financials are off limits! When we walked out to the car, I pulled out my phone and photographed every square inch of the car. What a horrible feeling thinking that the company you are doing business is looking for a way to scam you! I also told the young man he’d be smart to find a more honorable business to be in. Photograph your rental car, people! (And, I’m sticking with Hertz!)

  • S363

    I guess you think I drive a wreck. It’s a 2011 with about 49,000 miles. I still think it’s a pretty nice car.

  • SoBeSparky

    Probably is a pretty nice car, but are you paying $40+++ a day, or about $1200 +++ a month for it? Not too long ago, a Top 3 rental car was less than 12 months old with fewer than 18-20K.

  • $39072504

    What does Delta have to do with Budget?

  • I was just alerting everyone to the fact that I have a second post scheduled for noon today. It’s the long-awaited interview with Delta’s Allison Ausband. It has nothing to do with Budget or with rental cars.

  • JenniferFinger

    The car rental industry in America seems to have built its business model around fraudulent repair charges. Whether that’s the corporations or the franchisees, the car renters are the ones who get hit with those charges.

  • Dutchess

    I hope the US follows suit, just three weeks ago I believe enterprise tried to scam me out of some existing damage claim revenue. I rented a car while mine was in the shop and picked it up early one morning before work at 730am. It was still dark out and it was a damp morning, and they parked the car so that one side was hidden up against their parking lot sign. Like I always do, I pulled out my iPhone and took a video as I walked around the car looking for damage. I did my best to get a video of the hidden side but it was hard to get to. I signed “no damage” and was on my way to work. At lunch, I came out to the car and BAM three huge scratches near the top of the door and a small dent on the side that was hidden from view when we inspected the car. The paint was chipped and the damage was obvious. I pulled out my phone in a panic to review the video and by some miracle you could faintly see something on the tape that showed something.
    I called up the Enterprise yard and spoke with the agent and told them what happened. I went almost immediately to the enterprise yard and talked to the agent. He didn’t even want to see the video. They just marked the damage on the rental agreement and sent me on my way. It was easy, perhaps too easy, this was a 2012 car with few miles and they signed off on it like it was nothing. I truly feel they knew about the damage and thought they could charge me for it when I returned the car.

    Whether that’s true or not…Always Always Always….take a video of your car before and after.

  • Dutchess

    Wow, I can imagine the look on her face when you said “sweetness”. You’re evil.

  • Dutchess

    Because it’s not in their best interest to do so. If you can take one small scratch and charge 2 or 3 or 4 people for it why wouldn’t you? Other than being unethical of course.

    It’s the same reason they only do inspections upon return, it’s in their best interest to do it upon returns. If there was a previous scratch they will charge you upon return if it wasn’t noted. There’s a high likelyhood that people won’t challenge the claim so they get more revenue for the same scratch. If it does get challenged, they can quietly go away.They have to know this is happening.

    That’s why it’s best practice to take photos before and after each rental.

  • Dutchess

    I do agree that Hertz, while being a little more expensive than most other agencies, I’ve heard far far fewer complaints than with other companies. Also, hertz has a policy of light scratches (under 2-3 inches) not being charged or noted and they also note existing damage with a white dot or red dot of paint on the car near the scratch so it shows that it was previously recorded.
    I’ve rented with Hertz a lot and never had a problem.

  • Diver Dan

    One of these days there will be a revolt , people will rent for a day with full insurance and return cars with scratches, dents cracked windshields, flat tires etc. All the small things the car rental companies are pulling off. Then there might be changes

  • Joe_D_Messina

    It’s when they do go away easily that you REALLY need to be suspicious. If it is legit and they had somebody dead-to-rights they don’t just give up. But if they’re systematically floating bogus bills just hoping people will pay without question, then it’s in their best interest to just drop it when somebody fights. Way easier to just send another bogus bill to somebody who might quietly pay than get ensnared in a dispute that might cause them troubles.

  • Joe_D_Messina

    I remember a few years back seeing ads for those rental car sales where everything was last year’s model with 40K miles or less. My last rental had 60K miles.

  • William_Leeper

    A crack is a crack, and if it happened while you had the vehicle, you are responsible, regardless of how or why it happened. And just FYI, $200 was and is a steal for a replacement windshield.

  • Bill___A

    Although I understand your point – I have been able to check with people who know about windshields. A pressure crack is caused by an improper installation from what I’m told, so although “the renter is responsible” from what I understand, this would be easy to prove otherwise. If the engine falls out of the car when you drive out of the lot, are you going to pay? I won’t.
    As for the $200, this was a long time ago. If this were to happen today I would raise a considerable fuss about it.
    Apparently, due to the rocks we have from sanding, we have amongst the cheapest windshield prices on the continent (if you go to the right place). Dealer: $900 Windshield Place: $250

  • y_p_w

    My last rental had 6 miles on the odo. As in single digit mileage, in case someone thinks I didn’t type it completely out. I was completely surprised. I thought it might have been the trip odometer, but I fiddled around with the display, and it was 6 miles.

    And no – I didn’t really care about any kind of “break-in driving”.

  • y_p_w

    The last time I rented I was told that light scratches wouldn’t be an issue, but I’m still waiting for my credit card statement.

  • emanon256

    This is why I will never buy a used rental car :)

  • emanon256

    I have never had Hertz or Avis try to charge me with per-existing or fake damage. That seems to only happen with Dollar and Enterprise. Multiple times I have had Hertz bill me later for gas, when I returned the vehicle full (I always keep the gas receipt). And I have had Both Hertz and Avis one time each give me cars that broke down within minutes of leaving the lot. Avis immediately came out with a new car and swapped it out, Hertz scratched their heads and refused to do anything and I had to tow it and get it fixed. After complaining to hertz corporate, I did get reimbursed.

  • emanon256

    I have thought about that many times, but always wondered if there is some loophole where they can say I voided the contract and the insurance doesn’t help anymore.

  • y_p_w

    Honestly – a modern car probably doesn’t need a “break-in period”. Tolerances are tighter and a brand new engine is really tight and doesn’t need to be worn down to be running as well as it ever will.

    Still – I went through the whole ceremony when I bought my car. Drive it gently and warm it up. Since it had a turbo I was especially careful to let it cool down even though it was water cooled with a design that kept the turbo bearings from overheating. My owner’s manual specifically noted that the first oil change should happen AT 3000 miles – no more and no less. It didn’t have special recommendations for how to drive in those early miles.

    You can get European delivery for certain cars, and I’ve heard of new owners picking up a Mercedes-Benz or BMW and taking it immediately on the Autobahn. How’s that for gentle driving? However, I’ve heard that quite a few of the expensive European makes bench-test their engines for the equivalent of a few thousand miles before they install them.

  • emanon256

    I’ve heard that quite a few of the expensive European makes bench-test their engines for the equivalent of a few thousand miles before they install them.

    Now that’s a good idea! I wish all cars did that.

    My mechanic still recommends breaking in an engine. He said on the newer cars its not as important if you don’t plan on keeping it forever, but the way you drive the first 2,000-3,000 miles will determine how the engine is going to run when get above 100,000 miles or so. I tend to keep my cars up into the 300,000 miles range, so I want to know that it will last. He said he sees new cars that start burning oil and having other engine issues around 100,000 miles and attests it to it not being broken in properly. He said on modern cars the important thing is to not change the RPM quickly during the break in. He said I can go as fast as I want as long as I get there gently and bring it back down gently. So as long as they know that they will probably be okay on the autobhan. Though the people I know with BMWs and Mercedes always say they have expensive repairs once they get above 80,000 to 100,000 miles and end up getting a new one.

  • ExplorationTravMag

    18 people actually voted “No” on this? Really? I’ve never been stuck like this – the one time I had damage to a rental car, it was the result of a break-in and my insurance company handled it – no muss, no fuss.

    However, given the amount of travel I do, I’m sure it’s just a matter of time. Or maybe not, if the rental agency won’t do a walk around with me prior to renting, I let them know I’m taking photos of the entire car so they don’t need to worry about it. I did learn on thing on this board I hadn’t done, but I’ll do it the next time, is to e-mail the photos to myself afterward. Thus,a time and date stamp is assured. (And thank to whomever suggested that one).

    It’s sad we, the consumer, have to go to such great lengths to maintain the honesty of the businesses with whom we deal on a frequent basis. But then, that’s the culture we live in now – it’s only wrong when you get caught.

  • $25394585

    The auto rental companies in the USA are too powerful and State Attorney Generals have no back bone to go after them. Same old Same old. Try not to rent if you can.

  • Helio

    I probably never had a problem renting a car in US, because as a Brazilian a don’t have a valid insurance in US… But I always rent Hertz, and take a lot o pictures of the car.

    (BTW, the car insurance in Brazil seems to work in a different way here than in US – if I understand well, in US the driver has the insurance, despite of the car he is driving. In Brazil, the insurance is attached to the car, not to the driver – if I rent a car here, or I’m driving a friend’s car with no insurance, and the car suffers a damage while I’m driving, I cannot use my insurance to cover it)

  • Cybrsk8r

    Here’s my idea. Since it’s a pretty safe bet that some rental agencies try to bill multiple customers for the exact same ding or scrape, create a web-site for customers to enter their rental damage claim information into a database.

    So when you get a letter from a car rental agency claiming you damaged their car, you go to the web-site and upload your information, and at the same time, qwery the database to find out if the agency has tried to bill someone else for the same damage to the same car.

    It’s my guess that it wouldn’t take long before some rental agency is caught double-dipping and finds itself on the wrong end of a $250,000 lawsuit. Once rental agencies start getting hit with lawsuits, it won’t take long for this behavior to vanish.

  • operator

    Actually many locations do. The problem is that the commercially available systems are quite expensive ($20-30k) and are unfortunately patent protected, which means there is not a lot of competition to bring the prices down to a reasonable level.

  • Brad Ackerman

    I’ve seen such systems at parking garages (e.g. Q-Park LHR), but of course the garage operator would be the one paying for a fraudulent damage claim absent photos.

We want your feedback. Your opinion is important to us. Here's how you can share your thoughts:
  • Send us a letter to the editor. We'll publish your most thoughtful missives in our daily newsletter or in an upcoming post.
  • Leave a message on one of our social networks. We have an active Facebook page, a LinkedIn presence and a Twitter account. Every story on this site is posted on those channels. The conversation ranges from completely unmoderated (Twitter) to moderated (Facebook and LinkedIn).
  • Post a question to our help forums or ask our advocates for a hand through our assistance intake form. Please note that our help forum is not a place for debate. It's there primarily to assist readers with a consumer problem.
  • If you have a news tip or want to report an error or omission, you can email the site publisher directly. You may also contact the post's author directly. Contact information is in the author tagline.