Could the Canadian car rental scandal spread?

broadSomething about the $667 repair bill that Enterprise Rent-a-Car recently sent Jerry Bitting looked suspicious to him.

For starters, the car didn’t appear to be the one that Bitting, an account executive for a federal agency in Washington, had rented. The dates when the damage occured didn’t match the dates on which he’d driven the Mazda 3. The pictures were taken weeks after he’d returned the car. And questions to Enterprise’s damage recovery unit, asking for an explanation of the inconsistencies, were met with silence.

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“I told them that the damages were not there when I picked up the car or dropped it off,” Bitting says.

Bitting believed that he was being billed for someone else’s damage. He filed a complaint with the Better Business Bureau, which at the time gave the car rental company a rating of “F,” he says. Within days, Enterprise sent him a letter threatening to turn over the case to a collection agency.

Complaints about allegedly bogus damage claims appear to be a growing problem. I receive several requests for help every week. And a series of reports implicating Budget in a scheme to systematically and intentionally defraud customers by overcharging for minor repairs that sometimes aren’t even done is making headlines in Canada.

British Columbia’s Attorney General, Shirley Bond, is reportedly investigating allegations of fraud at several Budget locations, and it wouldn’t be surprising if a suspicious eye were eventually cast south of the border.

Until now, complaints such as these were quietly handled at the state level, but if the volume of grievances reaches a critical mass, then a problem like this could receive some federal attention.

Bitting, for his part, was undeterred by his setbacks. He contacted the Virginia Attorney General’s office and also asked me to help. Enterprise’s claim, he said, was “ridiculous” and filled with inconsistencies and “cryptic” notes that he couldn’t understand.

I asked Enterprise to review his bill, and it dropped the claim against him. I’ve had numerous conversations about damage claims with Enterprise in the recent past, and it believes that customers in the United States single it out for what they believe to be fraudulent damage claims because it’s the largest car rental agency.

Cases such as Bittings, it argues, are usually reversed as a gesture of goodwill, not because they are invalid. This seems to make its customers happy. But there’s a growing consensus among industry-watchers that closing damage claims to avoid extra scrutiny may not be enough.

Sharon Faulkner, the executive director of the American Car Rental Association, a trade group for the car rental industry, says that her constituents are “obviously concerned” about the Canadian investigation.

“That said, our industry serves millions of customers every year, providing affordable and accessible vehicles at the airport, as well as in thousands of neighborhood locations, and we’re proud to be of service in so many communities for the long term,” she adds. “Overall, the industry does a very good job of managing vehicle damage claims.”

The problem may not be the car rental industry’s current damage-recovery practices. After all, it has had years to fine-tune its claims process, and with the possible exception of a few rogue franchisees, it’s difficult to imagine this kind of fraud being carried out at a chain-wide level, with senior management’s blessing.

Rather, two other issues could broadside the industry. The first is how car rental employees are trained. One former Budget employee told Canadian broadcast network CBC that he’d been told to inspect vehicles from top to bottom and report any damage to managers no matter how minuscule, starting with the windshield. I spoke with a former car rental franchise owner in the States recently, who told me that she paid her employees to find damage on vehicles after they’d been returned.

Current and former car rental employees are only too aware that their business model is fragile. Take away the expensive insurance, fuel purchase options, navigation systems and aggressive pursuit of all damage to the vehicles, and your location could start hemorrhaging money. So it isn’t necessarily what the American car rental companies say about damages that could be damning – it’s what it says to its employees about them.

The second problem: People never forget. If you’ve been dinged for damage that didn’t exist when you returned your vehicle, you could spend years, and even decades, pursuing justice. Did I say “decades?” Yes.

Walter Bird contacted me recently because he’d received what he claimed was a bogus bill after he’d rented a Lincoln Towncar from Budget in Toronto – in 1995. No one had offered to do a pre-rental walkaround, and no one had been available to inspect the car, he says. They’d just handed him the keys. Several weeks after returning the vehicle, he says, he received a notification from Budget that it had charged $154 to his credit card for a damaged tire. No explanation, just a bill. He’s still furious.

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

It’s people like Bird who make me think that this time, someone, somewhere, is going to say “enough.” If the Federal Trade Commission can stop hotels from hiding “resort” fees and the Transportation Department can force airlines to come clean about delays, then it’s just a matter of time before this issue is taken up by an agency with meaningful regulatory oversight.

Okay, I’ll be honest. I’m not holding my breath. So, in the meantime, do this: Take multiple pictures of your car before and after your rental. If there’s damage, make sure you note it. If you’re uncomfortable with the pre-existing damage, ask for another car. If you don’t think your insurance will cover you, buy the extra collision-damage waiver.

Document everything. Your car rental company will.

Do you think the car rental repair "scam" will become a federal issue in the U.S.?

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28 thoughts on “Could the Canadian car rental scandal spread?

  1. You know, the part about the franchisee paying employees to find damage didn’t register much on me, at first. But thinking about it for a minute, if employees know they’ll get an extra $10 if they find a scratch, someone is going to try damaging a car intentionally just to get the money.

    For this reason, paying employees a bounty when they can find damage should be illegal.

  2. The problem is the practice of not inspecting the car with the customer before and after the rental. The car rental companies cut employees and passed the cost of damages along to consumers, without any mechanism to protect either party.

    Once a customer leaves the lot, that should be it. Any damage should be noted and documented at that time. No bills weeks or months later mysteriously appearing.

    1. I would agree, the one exception being after hours returns. If something happens to the car between when it was returned and when an employee checked it in, the renter is responsible.

  3. I don’t know if it will become an issue but it probably should become an issue. I think that there has been a sufficient number of these cases to trigger an investigation of the problem.

    Companies may say that they drop claims for goodwill but I believe that they would not drop them if they had compelling evidence that a customer had caused the damage.

    I have to state that I have rented from many different car rental companies over the last 30 years and I have never had a problem.

  4. If the problem is as endemic as the article hints, I’m surprised there hasn’t been an expose on it where news agencies plant people as employees to try to get the low-down on what’s really going on here!

  5. It won’t be a federal issue because the Department of Justice has more important thing to do, like hounding kids to death for downloading research papers. But your state’s AG could well be encouraged to get involved. It won’t hurt to try.

        1. If that kid couldn’t cope with his actions, it’s certainly not the fault of the authorities. What’s next — stop issuing parking tickets because someone that can’t cope might kill themselves over it?

  6. This has been going on for years. Hertz did the same thing to me a few years ago. (Oner $700.00.) When I proved it as a fraudulant claim, Hertz dropped it. Then my Company asked me to no to persue it.

  7. FWIW, I have rented numerous cars from a multitude of rental companies, both domestic and internationally, airport locations and in-town locations, corporate-owned and franchise, over the past 10 years since I started working, and have never once had a problem with a damage claim. The sole issue I’ve had was with an unscrupulous counter employee that slipped a bogus upgrade by me at the counter. But never any issues with damage. I always insist, however, that an employee sign my damage form before I leave the lot, regardless of how much attitude they cop about how it’s a waste of time and not necessary. So I suspect such scams are perpetrated by some rogue locations/employees, and not necessarily a major conspiracy by the chains.

    That being said, I agree that there should be some kind of time limitation on sending out a claim. The rental companies shouldn’t be allowed to try and get you days or even weeks later – or at the very least, should be required to produce date and time stamped photographs documenting that the damage was indeed there at the time of return.

    1. Are you renting under your company’s account? Most scams like these seem to target individuals. I take much more care to cross all my Ts when I rent personally. Company rental – I just drop it off.

      1. That’s a good point, backprop. Renting under corporate accounts I’ve never had a damage claim – and we’re talking dozen of rentals. Renting as an individual (less than a dozen rentals total) I’ve had two different bogus claims – both filed a month after I rented the car, both from locations that didn’t have anyone to check in the car, both with no pictures, etc. Of course I refused to pay either one and both were ultimately dismissed, but I do believe there’s some a systematic attempt to prey on individual renters by some companies.

      2. It’s been a mix of corporate and personal rentals, and with different companies to boot – never had any issues. Guess you could say I’ve been lucky in life; knock on wood that the luck continues!

      3. I think you’re also less likely to run into problems if your rental is part of an insurance claim (car in the shop after an accident, etc.). The rental companies don’t want to be taken off the list of approved operations.

  8. This is a very interesting discussion. I’ve had no problems in years of renting cars all over the world, Avis cheated us on repairing a little scratch but American Express took care of it. It would seem pretty simple to require the rental companies to bill you for damage at the time you return the car or forget it.
    But how many of us would be happy waiting for a thorough inspection of the vehicle when we’re on our way to catch a flight? And the airport garages are so dark who could see the damage at pickup or return? It will be interesting to see how this plays out over the next few years. The whole system is based on ethical behaviour, and it’s obvious from the stories that some rental companies don’t know what that means.

  9. I think this scam is widespread in Europe as well after renters are thousands of miles away and intimidated by the rental company’s aggressive threats. We had an experience a few years ago with Budget out of Frankfurt where they were claiming 800 euros in damages which we never caused and never paid. We always get our banks to cancel a credit card we have used and issue us another card with a new number. This seemed to do the trick as we never heard from Budget again. We travel extensively and now cancel any card we used right at the airport on our way home. Keep a different card that hasn’t been used where you have traveled. Needless to say we bad mouth Budget any chance we get and of course would never rent from them again. Since then and after reading other horror stories, we video record any car we rent and pay particular attention to any previous damage noted on the paperwork.

    1. That does not work to prevent additional charges to your account. If a charge comes in after you get a replacement card, your bank will still post it to your bill.

      1. Not in our experience. When our bank cancels a card at our direction, that card is completely canceled and no further charges are posted to that card’s number. I shouldn’t admit it but we have avoided paying parking tickets issued in a couple of cases in Italy and one in France by canceling a card used at the car rental agency right after returning the vehicle. You may need to check this out with your lending institution.

  10. Something similar happened to me, but as I paid for a rental one-way for a friend’s return to the location from which he had helped me move, I was totally stuck with what I knew was a fraudulent 347$ bill. He said there had been no indication of a problem when he returned the car, and no damage. But what could I do from a different city? This was 10 years ago, before everyone had a phone you could take pictures with. And yes, it was Enterprise.

  11. look at other side of coin … how many times do renters try & get away without paying for damage. Think it would many times that, which is goingon here

    1. THANK YOU.

      In an article published by Auto Rental News (industry trade publication) in May 2012, CE himself says “…A vast majority of damage claims are handled by the book, which is to say, the dings and dents are recorded and acknowledged at the time the car is returned, the estimate is fair and the loss-of-use and diminution-of-value charges are well-reasoned and adequately explained to the customer.”

      I work for a major car rental company, and the stuff people will do to get out of paying for damage is ridiculous to the point of laughable. They will spray paint, tape, glue, stand/place large roller bags in front of (really? how stupid do you think I am?) damaged areas on the car. So many people on here comment that rental agents go over the car “with a fine tooth comb” on return…every think about why? The sad fact of the matter is that even when customers know a vehicle has been damaged, most will stay quiet and hope the agent taking the return doesn’t notice. Read certain travel blogs and,travel forums (esp. FT) and you will see this attitude is widely shared among car renters, including many who choose to comment here.

      This isn’t to say that there aren’t shady franchise owners or a few shady location managers in the industry. It’s bound to happen considering it is a very labor intensive industry. However, to suggest that major car rental companies are using vehicle repair as a major profit source is 100% untrue; it’s always a cost to rental companies. This attitude shows ignorance, as well as a complete lack of knowledge of the car rental industry.

      Cue the personal attacks for working at a car rental company and having an opinion about the industry.

  12. I think car rental scams are a serious problem, but I also don’t think anyone is going to do anything about it at the federal government level in favor of customers. Customers are going to have to fend for themselves, just like now.

  13. I rented from Alamo a couple of years ago in Vegas and they did a walk-around with me, noted no damage, and off I went. When I returned the car, the same employee was there to do the check in. The very first thing he did was get on the ground and look underneath the car. He said, “Oh, looks like you hit something, there’s damage to the undercarriage”. There was a dent and scrapes underneath the car. Not towards the bottom of the car, but literally underneath the car. I got a letter demanding $1,000.

    I refused to pay it and it took almost 6 months to get them to drop the claim.

    That was the last straw for me; I will never rent from Alamo again. Nothing makes me happier than to tell everyone and anyone that will listen, about how Alamo scams customers for extra income. The bad news is that most of the car companies appear to do the same thing. I’m having OK luck so far with Avis, so I”ll keep my fingers crossed that they hold up.

  14. If it is “goodwill” when they drop claims like this, what is it when they pursue this even though the rental dates don’t match? Badwill? If things are so messed up that the dates don’t match, then they’ve obviously either got the wrong guy or things are so screwed up they’ll be forced to eat it and wait for a case where their facts are straight.

  15. A similar thing happened to ,me in Canada in the 90s. I filed a complaint and the Dollar rental car did not move forward. HOWEVER, the Dollar rental car in Boston did. My VISA card upheld my complaint and did not charge the extra to my VISA account. I called corporate and they agreed with me and said I could quote them to the local company in Boston; however, they could not do anything because the Boston rental agency was locally owned. I noticed my added bill had a different name from Boston rental car. I was so unhappy because RCI had made my reservation and would not be my ‘voice”. Two of three credit agencies went with me, but a third did not. We returned the car to an employee and he said all was well. Three days later we got a call at home accusing us of damaging the car. I will never rent with Dollar again.

  16. More than once I have pointed out damage to a car I was renting and the agent seemed perplexed that I would not drive the car off the lot before they marked down the location of the damage. A couple of times I have been told that whatever I was pointing out was “too minor” or “just a scuff” … gee, if it is a scuff it didn’t come off when you washed this car. I still make them write it down.

    Ironically, the only time I have ever damaged any rental vehicle was a “scuff” that was smack-center in a 8″ pre-existing dent marked on the rental agreement.and I was able to rub it off amid the already cracked paint and deformed steel.

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