The Car Rental Industry is Ripe for Reform

Matt Graham
Manager filling car rental documents standing in the showroom with car on the background
There are many complaints about the car rental industry. Photo: Adobe Stock.

There aren’t many industries that generate as many complaints as the car rental industry.

While there are certainly plenty of car rental businesses that do the right thing, too many are routinely overcharging or even outright scamming their customers. Some of the particularly egregious methods include charging for pre-existing damage and even simply changing the cost of the rental after they’ve already returned the car.

The problem is that there are barely any consequences for car rental businesses that “try it on”. This has become such a widespread problem, in so many different countries, that the time has probably come for governments to intervene to protect consumers.

The many, many ways car hire companies try to rip off customers

Ask almost anyone who’s rented a car, and they will probably have at least one horror story. There are just so many potential traps that customers need to be aware of. It’s all a bit of a minefield, really.

We don’t have to look far to read some of those horror stories. The Australian Frequent Flyer forum alone is littered with complaints about car hire scams and rip-offs, both in Australia and overseas.

Here are just a few examples of things that car rental businesses are doing:

Some companies have even been accused of scamming customers systematically.

And then there’s the reprehensible story of Hertz in the USA falsely accusing customers of stealing their cars. This led to at least 364 Hertz customers getting arrested for simply renting a car from Hertz.

Hertz car rental counter at Christchurch Airport
Hertz wrongly accused hundreds of customers in the USA of stealing its cars. Photo: Matt Graham.

Some rental companies wait for the customer to leave the city before inflicting extra charges

Airport locations are particularly “good” at adding extra charges to someone’s bill after the rental period has ended – knowing that the customer is probably already in the airport or flown to another city by the time they’re notified of the extra charges. This makes it harder for the customer to fight the charges, especially if the rental company automatically deducts them from the credit card on file.

Sometimes, the only way to get these charges reversed is to submit a credit card chargeback request.

Steps you can take to protect yourself against car rental scams

There are so many potential traps with rental cars that I personally try to avoid using them where possible. But sometimes, they really are just the most practical way to get around at your destination.

So, if you do need to rent a car, how can you avoid getting scammed?

Check the reviews

When renting from an agency I haven’t used before, I always check the Google reviews. Pretty much every car rental business will have some negative reviews, but if the majority are negative and many of those reviews complain about getting scammed, I’ll give that business a wide berth.

Even if you trust a particular brand, many rental businesses are run independently as franchises. So, just because you had a good experience somewhere with a particular company, doesn’t necessarily mean the same thing will happen when you rent from the same company in a different city or country.

Take photos before and after every rental

A good way to protect yourself from fake damage charges, or being charged for pre-existing damage, is to take photos of all sides of the car. You might even take a video while walking around the car.

Rental car in airport carpark
It’s a good idea to photograph your rental vehicle when picking it up. Photo: Matt Graham.

Do this right after you pick it up, and right before you drop it off. This way, you have time-stamped evidence of the car’s condition.

I also take photos of the dashboard showing the odometer and fuel gauge. This protects yourself against fake charges for excess kilometres or returning the car without enough fuel. (I also keep all fuel receipts for this reason.)

Photo of a rental car dashboard
I take photos of the dashboard in rental cars, in case I need them later as evidence. Photo: Matt Graham.

Take out the zero-excess insurance

I’ve heard so many stories about people being charged for damage they didn’t cause, that I now always take out the top insurance cover with zero excess. This obviously protects me in case I happen to be involved in an accident, but that’s not the main reason I get this. It’s also insurance against the rental company itself.

When you have zero-excess insurance, the rental company won’t charge you extra for damage even if you do (accidentally) cause it. This means that, when you return the vehicle, staff are not incentivised to thoroughly examine the car, looking for any kind of defect they can bill you for. (Yes, this does happen.)

Of course, this insurance often costs just as much as the car rental itself. If the extra cost makes the rental cost uncompetitive, I might choose to use an alternative means of transport instead.

Why are car rental scams so common?

To be clear, not all vehicle rental businesses are actively trying to scam their customers. Many do the right thing, knowing that good reviews and repeat business is important.

I can also imagine that running a car rental business is expensive, and it is fair enough to charge customers if they do actually cause damage or don’t return the car on time.

Despite this, car rental scams are way too common. Why? I think this AFF forum post gets to the heart of the issue:

What is the incentive for car hire companies not to ‘try it on’ by adding additional charges. 

Today, after returning the vehicle with a full tank they added the fuel surcharge to my bill. Of course, all apologetic but what really is the incentive for them to be honest?

As a lone irregular hirer I don’t have enough intel to be able to track it down. Are others being systematically rorted? How many occurrences would ACCC need to receive to get interested? Unfortunately I only have the one rental in Australia.

albatross710 on the AFF forum

The incentives are all wrong

It seems that many car rental businesses opportunistically add extra charges that they know are not legitimate because they can!

Sure, savvy customers will usually notice the extra charges and fight to get them removed from the bill.

When this happens, the rental agency will usually remove the erroneous charges and that’s the end of it. The business almost certainly won’t get fined or penalised for its conduct. And the customer is unlikely to take legal action once the charges are removed.

At the same time, some customers might not notice the extra charges. Others might just pay them anyway because they can’t be bothered arguing or their employer is paying the bill anyway.

So, the business might make some extra money. But at the same time, they don’t really risk losing anything if the customer fights the charge – other than perhaps a bit of goodwill. With those odds, there really isn’t much of an incentive for businesses to do the right thing!

Besides, many customers are visiting from interstate or overseas. Even if they never rent from that agency again, there will still be many other new customers in the future who will.

Quite often, the franchisor also fails to take action to bring their franchisees into line – even when they may be damaging the brand’s reputation.

This is why I think it’s time for governments to create real financial penalties for car rental companies that deliberately try to trick customers into paying more than they should. The car rental industry needs regulatory reform.

It’s not good enough for the company to simply waive fake charges if the customer happens to claim. There should be real financial penalties for even attempting to wilfully overcharge. Otherwise, customers will continue getting ripped off in broad daylight.

Leave a comment or discuss this topic on the AFF forum
Matt Graham
The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to more than 100 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil, Kazakhstan and Uzbekistan. His interests include aviation, economics & foreign languages, and he has a soft spot for good food and red wine.

You can connect with Matt by posting on the Australian Frequent Flyer community forum and tagging @AFF Editor.
Matt Graham
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SYD May 23, 2025 #1

I’ve rented a LOT of cars over the years for both work and leisure and 99% of the time there have been no issues.

I totally agree with doing a proper inspection of the vehicle before driving away (take photos at pickup AND return).

Checking out the Google reviews for a specific franchise office (especially non Airport offices) is very good advice. My worst experience was an AVIS office in Santiago, Chile that didn’t have enough cars, and even as AVIS Preferred, they didn’t give a sh$t. “Come back tomorrow and we might have a car”. WT actual F sort of business is that? We weren’t the only ones but fortunately a local walked us to another rental company that had cars.

I don’t as a habit take out the full insurance option, but once in Costa Rica, the extra was minimal, so I did. Very fortunate, because a motorcycle ran into to us!

The only times I had suspect damage to the car, were both work rentals from the PER AVIS. Both times it was very dark when I picked up the car. So if there was damage it would have been difficult to see. Who knows if the damage occurs in the lot…

One of the more frustrating but legit practices is the unwanted “upgrade” to a tank while driving around Europe with tiny parking lots.

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elanshin May 23, 2025 #2

Is taking out the top rental insurance the right play vs having your own separate insurance? I find generally speaking the car rental insurances to be more expensive and covers less. Some even lose their cover if you're at fault (check t&c carefully).

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markis10 May 23, 2025 #3

Why are “Articles” increasingly seeming like personal rants rather than the balanced informative pieces they should be? I rarely read them for that reason, as someone spending five figure sums annually on car rentals most of the last thirty years, I made the mistake in this instance.

The car rental industry is generally self regulated with a new code of conduct effective at the start of last month, the existence of which seems to be a glaring omission to this rant.

There is also a dispute resolution process, the Australian Car Rental Conciliation Service will review the evidence from a complaint against the Code and provide an impartial decision.

Additionally, general oversight protections are also provided by Australian consumer law (ACL). Where conduct has been found to be systematic and unfair, action has been taken. For instance it’s considered an unfair contract if rental car companies hold a consumer to be responsible for damage in the period between a cars return and its inspection by the car rental company. I wonder how many members are aware you have the right to be present when that inspection is done?

Notable action by the ACCC includes:
Hertz refunding 283 customers about $243,000 between January 2014 and August 2015 in relation to incorrect pre-existing damage charges
$200k civil pecuniary for a europcar franchisee in Tasmania that deliberately overcharged customers for hire vehicle repair costs and failed to refund overcharged customers
Four-wheel-drive (4WD) vehicle hire business Smart Corporation Pty Ltd (Smart), ordered to pay an $870,000 penalty for breaching the Australian Consumer Law.

It’s important to note ACL coverage is also applicable to businesses renting vehicles where the expenditure is below $40000.

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m muppet May 23, 2025 #4

Why are “Articles” increasingly seeming like personal rants rather than the balanced informative pieces they should be? I rarely read them for that reason, as someone spending five figure sums annually on car rentals most of the last thirty years, I made the mistake in this instance.

The car rental industry is generally self regulated with a new code of conduct effective at the start of last month, the existence of which seems to be a glaring omission to this rant.

There is also a dispute resolution process, the Australian Car Rental Conciliation Service will review the evidence from a complaint against the Code and provide an impartial decision.

Additionally, general oversight protections are also provided by Australian consumer law (ACL). Where conduct has been found to be systematic and unfair, action has been taken. For instance it’s considered an unfair contract if rental car companies hold a consumer to be responsible for damage in the period between a cars return and its inspection by the car rental company. I wonder how many members are aware you have the right to be present when that inspection is done?

Notable action by the ACCC includes:
Hertz refunding 283 customers about $243,000 between January 2014 and August 2015 in relation to incorrect pre-existing damage charges
$200k civil pecuniary for a europcar franchisee in Tasmania that deliberately overcharged customers for hire vehicle repair costs and failed to refund overcharged customers
Four-wheel-drive (4WD) vehicle hire business Smart Corporation Pty Ltd (Smart), ordered to pay an $870,000 penalty for breaching the Australian Consumer Law.

It’s important to note ACL coverage is also applicable to businesses renting vehicles where the expenditure is below $40000.

Sure but why should anyone have to access a “conciliation” service for what is fundamentally financial fraud?

These companies know you didn’t damage the car or bring it back empty - yet deduct costs from your credit card - simple fraud.

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k kangarooflyer88 May 23, 2025 #5

Having rented cars globally, I must say the issues pointed out in the article are by no means unique to Australia. Indeed, one of the first car rentals I ever had was in Dublin, where I was dinged for damage that was already on the car to the tune of a couple hundred Euros. The key lesson learned there is to take video footage of the pickup and drop off of cars at the rental car locations.

This saved my bacon on a subsequent rental in York, England, where Hertz tried to ding me a couple hundred quid for pre-existing damage. Fortunately, I was able to review the footage from when I picked up the vehicle and send them a frame which clearly showed the damage was pre-existing. A day or two later I receive an email from Hertz saying they reviewed the footage and agreed to reverse the charge.

-RooFlyer88

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SYD May 23, 2025 #6

Is taking out the top rental insurance the right play vs having your own separate insurance? I find generally speaking the car rental insurances to be more expensive and covers less. Some even lose their cover if you're at fault (check t&c carefully).

I usually rely on travel insurance for the rental “excess” (and often have an Annual Policy in play most of the time. But there’s still a catch.

Rented a car in ADL years ago. There was an incident and some damage to the car but the repair costs were less than the $2000 “excess”, so the TI declined to pay - the cover was only for an “excess” up to $5000. If the car was written off, I would have been covered…

Also, when people say full insurance, it usually means “excess” reduction (which can be down to $0). If there’s damage (regardless of fault - but don’t be drunk), you return the keys and say goodbye. The other addons (personal effects, additional liability cover) ought to be in your TI also - so usually completely unnecessary.

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c cambriamarsh May 24, 2025 #7

I usually rely on travel insurance for the rental “excess” (and often have an Annual Policy in play most of the time. But there’s still a catch.

Rented a car in ADL years ago. There was an incident and some damage to the car but the repair costs were less than the $2000 “excess”, so the TI declined to pay - the cover was only for an “excess” up to $5000. If the car was written off, I would have been covered…

Also, when people say full insurance, it usually means “excess” reduction (which can be down to $0). If there’s damage (regardless of fault - but don’t be drunk), you return the keys and say goodbye. The other addons (personal effects, additional liability cover) ought to be in your TI also - so usually completely unnecessary.

And the standard excesses are getting ridiculous. Rented a car from Europcar at BNE, $6k! It makes the rental quoted feel like a bait and switch. The excess reduction charge was 90% of the base rental!

I agree I could have said no but fortunately had my own travel insurance already in place. However that would only have covered up to NZD5k of excess so if there'd been an issue that was on me. Fortunately gave the car back and no problems.

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Y Yipchoi May 24, 2025 #8

The article seems to make a few statements that suit the narrative….
For example “ When you have zero-excess insurance, the rental company won’t charge you extra for damage even if you do (accidentally) cause it”
Excess can still be applied, accidents / damage deemed caused by negligence any coverage may be nil and void.

Whilst not defending a lot of the wrong doings the majors do……

Some info you may find interesting though:

Excess:
The major rental companies self insure, yes they do have insurance but would only come into effect in the event of major losses, above a certain amount i.e Major Hail Events, write offs etc. Cost of repairs to damaged vehicles comes straight from the bottom line.
3rd Party excess reduction / Policies purchased on line when booking through aggregators such as Cartrawler or Annual Policies. You are still liable to the rental company to pay excess and then try to claim it back.
An excess of up to $6000 for example also takes into account the amount of $$ that is due to the Airport Authority.

Fees & Taxes:
Airport Surcharge - Every retailer that operates on an airport is liable to $x amount as a minimum to the airport operator otherwise known in the industry as ‘minimums’ which is essentially a yearly license fee to the airport. This is recovered by the ‘Premium Location Surcharge’ or ‘Airport Access’ fee that you see on a rental agreement, is normally calculated as a % of the total rental cost. In AU these airport fees range anything from 12% to 34%. This is applied to every product that is sold to a customer. As an FYI monthly revenue has to be reported to the airport by all on airport operators.

Fuel Charges:
On airport operators purchase and install on site pumps at their back up facilities. Obviously there is a cost to maintain, local EPA licences and then the cost to purchase fuel of which is not discounted by the fuel companies and the ‘manpower’ or extra step in the turnaround process all adds up, and not forgetting the airport tax! This helps explain why in some cases it’s double the pump price for the rental company to charge the customer.

There is a lot more I can impart my knowledge on but conscious I don’t want to bore anyone, however if you do have any further questions then feel free to shout out and I will do my best using my 30years experience of being in the car rental industry.

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c clifford May 24, 2025 #9

I always rent from Hertz, due to my (ex) employers discount, and I always take out max insurance (well now at least, perhaps not always previously). Now I never receive even a cursory check when returning, so money well spent.

However, in previous times, I did have a rather unpleasant experience when returning to SYD Intl early one morning (it was still dark). There was a posse of employees waiting to meet me (colluding for the spoils no doubt) and I was told that there was some damage on the vehicle's bonnet. Well, I couldn't see anything (but it was dark) and neither could my camera. Anyway, they hit me for an $800 charge there and then, with no possibility of contesting it on the spot. They had it well rigged. So I dropped by the Hertz desk in the terminal and explained what had transpired. The agent didn't seem to be surprised and told me just to put in a complaint including the the photos to head office in Sydney. A couple of days later I received an email saying that the charge had been removed. Perhaps they didn't want to antagonise my employer, their biggest customer in Australia...

On another occasion, I was planning to rent a car from Hertz at Bournemouth airport (BOH). Then I checked the reviews and there were just too many negatve comments from out of towners who got ripped off in some way. I guess the franchisee saw the gold in them thar tourists and felt there was no downside in ripping them off. Needless to say I didn't rent from him.

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Jacques Vert May 24, 2025 #10

I've rented cars in numerous countries. The most common issue I've come across is the fuel scam (in Spain, South Africa & others). To protect myself I now do the following:

  1. I fill up with fuel at the nearest service station to the drop-off point and ask them to include the mileage on the receipt. When dropping off the car I place the receipt on the dashboard alongside the odometer and take a photo. I make sure the attendant is watching me while I take the photo (or at least aware of what I am doing). It's my belief that it is the employees that fill up their own cars and charge it to the rental rather than the principal; but who knows? At least this procedure will encourage them to charge the false fuel cost to someone else;
  2. I get +1 to take a full video of the car when picking it up and also when dropping it off; and again I make sure that an attendant is watching or at least is made award that we are taking a video;
  3. I never take the extra "excess reduction" insurance at the rental vehicle office: it is way overpriced and this is where the rental company makes its money. (This is why the rental companies push excess reduction so forcefully when you are picking up the car; I recently had to threaten to cancel a booking before the company would accept I had my own insurance.) I usually have travel insurance that includes rental vehicle excess cover (but you need to make sure that the quantum is sufficient to cover the excess charges. On those occasions where my travel insurance does not have "excess reduction" insurance, I take a separate policy to cover this. Using Google I have been able to find excess insurance online for far less than that offered by the rental company;
  4. I generally use an aggregator to book my rental vehicles as their charges are much more reasonable than the majors (although you generally have to pick up the vehicle "off-site" rather than at an airport). I've found both arguscarhire.com and qeeq.com to be good and reliable;
  5. Finally, don't overlook Citroen/Peugeot/Renault car leasing in France/Europe. Last year I leased a Citroen C3 Aircross for six months for $32/day and it came with full, no excess, insurance. It was greatly appreciated when I had a minor accident: just handed the car back at the end of the lease with no questions asked.

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