Paying up front for rental car nicks and scratches

By | October 24th, 2010

The late-model Chevrolet that Sukumar Thanawala rented from Thrifty Car Rental in Munich in the spring looked “absolutely fine” when he returned it, he said.

But a few weeks later, Thanawala, a software designer from Naperville, Ill., noticed that the rental agency hadn’t refunded his $763 deposit. When he asked why, Thrifty furnished him with a photo of a barely visible nick on the car door and a small scratch on one bumper. “You have to look really hard to find it,” Thanawala said.

Thrifty had done what by some accounts is becoming more common when a rental car is damaged: It had pocketed his deposit.

Randy Harris, president of Khoury Alternative Claims Management, a San Antonio company that handles damage claims for car rental companies, says that charging customers immediately for damages used to be rare. “The only time that I have seen it is when a car rental company knows the claim is going to be above the renter’s insurance deductible,” he said.

Even then, the standard operating procedure – at least until now – has been to ask renters whether they want to settle the damages. “It’s something they would agree to, and the claim would be settled on the spot,” explains Robert Barton, president of the American Car Rental Association, a trade group.

But what if there’s no agreement? Consider what happened to Carri Schoeller, a real estate agent from Orlando, when she recently returned a rental car to Enterprise in Phoenix. A representative “eagerly went around the car like Sherlock Holmes” looking for damage, Schoeller said, and found a few scratches that she maintains were pre-existing.

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“We were hauled over to the processing office and our $256 bill jumped to $772 – of course, taken from our credit card without our authorization,” she said.

The car rental industry’s aggressive position on damages makes some sense: A badly scratched or dented car can’t be rented and doesn’t hold its value when a company tries to sell it. But many customers charge that damage claims are a source of profits to car rental companies, which ding them for normal wear and tear and even when the evidence that they caused the damage is circumstantial at best.

I’ve been fielding a high number of queries from travelers about bogus damage claims. In the past, it’s been relatively easy to fix these problems, because car rental companies waited until they received a damage estimate, repaired the car and calculated their loss of use before presenting a customer with a bill.

Unless a company could prove that a customer had harmed a car, travelers simply refused to pay. Charging the customer immediately takes away that leverage.

Kathleen Hernandez, a spokeswoman for Thrifty, said some domestic and international locations now keep an additional charge slip in case one of their cars is damaged, which is what happened to Thanawala. “In the event there is damage to the vehicle, the location retains the deposit until they are able to get an estimate on the damage repairs,” she said.

Although she said the damage to Thanawala’s car had been properly documented, Thrifty agreed to refund his deposit.

Enterprise typically asks customers who don’t buy its damage waiver but return a damaged rental vehicle whether they want to pay their insurance deductible. “We offer this as an option for customers who prefer to immediately take care of that portion of the claim,” said Laura Bryant, an Enterprise spokeswoman. “And only with their authorization.”

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But if customers are unsure about their deductible or want to see an estimate or an invoice, the company’s practice is to bill them later for damages. Enterprise dropped its claim against Schoeller and refunded the $500 it had charged her in apparent violation of its own policy.

You don’t have to be a consumer advocate to know that car rental agencies shouldn’t ask customers to pay for dings and dents without knowing how much the repair will cost. Or that customers should refuse to pay until they see an invoice from the body shop. But it might help to know that if you’re ever stuck with a charge on your card that you didn’t authorize, you can – and should – formally dispute the bill.

If you damage a car, you should pay for it. But all in good time.

(Photo: darren 131/Flickr Creative Commons)

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