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.

“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.

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