A damaging trend for rental-car companies?

by Christopher Elliott on February 19, 2013

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Something 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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  • sk

    If the renter has to inspect the car at the time if rental and report the damages found…why doesn’t the rental agency have to do the same…at the time of return… It make no sense to claim damage done weeks after the rental.

  • DCTA

    it’s very, very frustrating trying to get someone to inspect the car when you take it out – I often have to fight with the person at the booth to sign off on the damage notations I’ve put on the contract – they don’t want to get out of the booth!!!! Coming back, it seems to be a bit easier but it always seems that I HAVE TO ASK for the inspection before I leave.

  • MikeABQ

    At Hertz in Tucson, Phoenix and Las Vegas I’ve never had any problem getting a rep to make a note of damage; in fact, it was all done with a smile. (Keeping a good attitude yourself and being polite goes a long way.) Dollar and Enterprise are the most aggressive at trying to sell you the extra insurance so it doesn’t surprise me that Enterprise is now accused of fraudulent billing for unsubstantiated damage. Christopher is right; most of us have a camera on our phones so take pictures and insist on notations. Ask for a different car if necessary.

  • BobChi

    Interesting how in your concluding paragraph you note, “Buy the extra collision-damage waiver.” Isn’t that what they’re really after? They come up with all the arguments they can to mess with your peace of mind so you’ll pony up, then if you don’t, they make damage claims, evidently often bogus, but with little to lose, even if you fight them. The business model is broken.

  • janice

    I will say that Hertz has really been good in the years I have used them. In fact, about a month ago a hubcap fell off the car I rented with them while driving on a smooth stretch of highway. I called them when I got to my destination, explained that I had not hit anything or even gone over a rough road. And the car had no damage otherwise which they could see when I returned it. So far, no problems or bills. (Yeah I know, knock wood.) But I do think the “premium” companies are usually better here.

  • reasonedthought

    I have a long list of issues with car rental agencies, including bogus charges, trying to collect on damages even though the loss damage waiver was purchased, billing for damage that was reported at the time of rental, trying to get a customer to buy 5 tires when one tire went flat and the addition of an additional high season fee not disclosed on the rental agreement but added to the final bill. Over the years I have fought with almost all of the rental agencies on behalf of my clients. I haven’t had a fight with Budget since 1990 because I refuse to do business with them due to one dispute. As near as I can tell, their refusal to do the right thing has cost them in excess of a million dollars worth of business since then. I find that it helps to be able to carry a big stick when dealing with car rental agencies.

  • tw

    Currently in Hawaii where budget gave me a car with undercarriage damage behind the right front wheel. Only noticed it on a road trip with significant wind. I had no way to reasonably check this area at the time of pickup. Called and they asked me to bring in the car due to potential safety reasons (which was my concern). Took the car in and I am subtly accused of damaging it. My report explicitly states that the car as driven on pristine roads and was clearly returned clean and as received. No incident or accident. They seem intent on sticking it to me . The only way a car can be damaged like this without substantial damage elsewhere is if it was lifted incorrectly to change a tire, or on a lift jack. The car I received as a replacement has the miles as 2000 less on the tag than on the car…..in other words: something is rotten in the state of Hawaii.
    Not long ago loyalty was like trust and respect:earned. These days new “loyalty ” programs bribe customers for their. Business while treating those not in the program like dogs.
    I will be fighting this to the end no matter what it takes. These criminals need the dressing down.

  • tw

    Update: talked to them today and maintenance manager has indicated that the panel was loose and was reattached. No charge. I will be getting written confirmation. I am disappointed that I was not called sooner about the outcome.

    Lesson: undercarriage may be an issue in some places. Ask for confirmation of regular post usage inspection by the company. Take pictures of everything before you leave the lot, including the interior.

    tw

  • http://www.bikersurance.com/ smith

    i think now a days there are many car companies out there who providing much better services for their customers.

  • Guest

    high deman

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