EU’s new rental car rules could be signpost for US

If you rent a car in Europe this summer, you might notice a few changes. Pay attention to them. They could be coming to America soon.

Rental prices now include every mandatory fee. Optional extras and insurance are more clearly explained in plain language. There’s also a new, more streamlined pre-rental vehicle inspection process, to prevent erroneous damage claims.

These upgrades are part of a voluntary agreement between the European Union and five car rental companies operating in the 28-nation bloc, and the possible precursor to more formal, Europe-wide regulation of rental cars. And while that may not affect you unless you’re headed to Europe, it could set off a wave of car rental industry regulation that could soon reach our shores.

“Once the regulators are let loose, anything can happen,” says Charles Abelsohn, an attorney who has been watching Europe’s journey toward car rental regulation. “And it usually does.”

What’s behind the changes, and what do they mean? Last year, European regulators received about 2,000 complaints about rental cars through its European Consumer Centres, which help consumers when they travel or buy cross-border. That’s about twice as many as they got in 2010, leading the European Commission and national consumer authorities to approach the five leading car rental agencies for a fix.

The result were voluntary measures undertaken by Avis, Europcar, Enterprise, Hertz and Sixt. Car rental companies also agreed to revise their processes for damage claims. They’ve added what the EU calls a “clear procedure” for vehicle inspection, under which customers will receive reasons and evidence of any damage, before the payment is taken. The companies also gave their assurance that the damage claims process would be fair, with a procedure to challenge any damage before paying for it.

“Any time car rental companies can get together with regulators and agree upon guidelines that govern the entire industry — as opposed to a patchwork of individual rules, company by company — that’s a win for the consumer,” says Chris Brown, the executive editor of Auto Rental News, a trade publication.

But it’s not a complete win. For starters, the agreement covers only a handful of car rental companies. Brown says in order for it to really work, it will need to extend to third-party sites that sell rental cars, such as travel agents. Unless they, too, quote an all-inclusive rate and disclose insurance and optional amenities, the voluntary agreement might be flawed.

Question is: Do we need something like this here? Ask consumers like Ellen Panther, who rented a car for a ski trip with her friends in Vail, Colo., and the answer is yes. She found an inexpensive rental car for $196 a week through Budget.com.

“When I arrived to the rental car counter, a sales representative immediately began trying to upsell me by convincing me that it is in the interest of my safety to rent an all-wheel-drive vehicle, not mentioning that it would cost me more,” says Panther, a communications consultant from Chicago. “When I agreed to her recommendation on that and purchased insurance for the week, my total came to over $600.”

Panther refused, asking for her original reservation. Once taxes and fees were added, the a week in a smaller Kia Soul still cost a little over $500.

How to avoid fees on your rental car

“I definitely feel it is important for rental car companies to be more transparent in their quoting process and develop more ethical sales tactics for their representatives,” she says. “It’s a shame that this is happening across the U.S. with no repercussions or regulations.”

In the United States, car rental companies are regulated at the state level. They must comply with certain federal laws, particularly when it comes to pricing, but those statutes are not exclusive to the industry. The greatest effect on car rental company pricing may be market pressure.

“Over the years, due to the competitive nature of the major rental brands along with bad PR as a result of business practices which were opaque to renters, the rental booking process has become more transparent and understandable on its own,” says Neil Abrams, a car rental consultant based in Purchase, N.Y. At the moment, market forces have created a system in the United States that essentially requires full disclosure and explanations of fees, surcharges and taxes, he adds.

For now, talk of regulating car rentals in the EU and here is exactly that: talk.

European authorities will “continue to monitor the car rental market closely,” and if the voluntary steps don’t work, they could create regulations similar to EU 261. That’s the European airline consumer protection regulation establishing common rules on compensation and assistance to passengers in the event of denied boarding of canceled or delayed flights.

The effects of the EU measures haven’t really been felt by motorists yet. Jonathan Weinberg, the cofounder of the car rental website Autoslash.com, says it’s too early to tell if the voluntary steps will have any effect, or if they’ll spread to other countries.

“As it currently stands,” he adds, “it seems like the EU measures lack both teeth and widespread adoption.”

What the EU is doing for car rental customers

Five car rental companies — Avis, Europcar, Enterprise, Hertz and Sixt — have agreed to take voluntary steps toward improving price transparency, insurance disclosure and fuel options. They include:

• Clear pricing. The total booking price will now include all “unavoidable” charges, including airport fees, taxes, and any mandatory equipment such as winter tires. All such charges must be included in the “headline” price, according to the EU.

• “Plain language” contracts. Drivers will be told what their rental does and doesn’t include. Disclosure covers amenities, mileage, fuel policy, cancellation policy and deposit requirements.

• Insurance and other extras. Customers will also receive information about any available extras, including insurance. They’ll be told what a waiver covers and what it doesn’t before they decide to buy insurance.

• Transparent fuel policies. Drivers will be always given the option to get the car with a full tank and bring it back full.

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