Article: The Car Rental Industry is Ripe for Reform

[AFF Editor]

The Car Rental Industry is Ripe for Reform is an article written by the AFF editorial team:

The Car Rental Industry is Ripe for Reform

There are so many horror stories about car rental companies trying to overcharge or even outright scam their customers. The problem is that they're incentivised to do so!

www.australianfrequentflyer.com.au

You can leave a comment or discuss this topic below.

 

[SYD]

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.

 

[elanshin]

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).

 

[markis10]

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.

 

[muppet]

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.

 

[kangarooflyer88]

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

 

[SYD]

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.

 

[cambriamarsh]

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.

 

[Yipchoi]

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.

 

[clifford]

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.

 

[Jacques Vert]

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.

 

[SYD]

Ah, yes. I meant to mention the old “Return empty” promo. Not necessarily a scam unless you know exactly how much fuel is in there, what the average consumption is as per your driving and how far you are actually driving and the prevailing traffic conditions.

How hard can it be….