Consumers Digest

How to Avoid Being Taken for a Ride

November 2012

BY Katie Morell

Horror stories abound of car-rental agents’ constant push to upsell you on insurance, roadside assistance coverage and GPS technology. Those antics are enough to make you gnash your teeth, but, as the late-night pitchmen like to say, “Wait, there’s more.”

The policy of renting recalled vehicles has come into question by consumers and politicians of late. As shocking as it sounds, car-rental companies aren’t required by law to take out of circulation recalled vehicles in the same way that car dealerships are—a fact that has led to at least two deaths. At press time, the House and the Senate had proposed legislation to end this discrepancy, and finally, after months of heel-dragging, three of the four major car-rental companies decided in September 2012 to back the legislation. (Hertz pledged its support earlier.)    

However, you still might be charged excessive fees if you stray from car-rental companies’ rules on fuel or electronic tollway transponders. Worse, some operators of car-rental facilities are scamming you when it comes to damage claims, meaning that you have to scrutinize your bill as well as the vehicle itself.  

TOTAL RECALL. The car-rental industry largely is unregulated at the federal level. Consumer advocate and nationally syndicated columnist Christopher Elliott says each state regulates car-rental companies piecemeal. That means, for instance, that a state’s motor vehicle department might monitor how a vehicle is operated, and an insurance commissioner would be in charge of how a rental car is bought or sold, but nobody oversees the big picture. Pricing isn’t regulated at all, Elliott says. It’s no wonder that consumers end up falling through the cracks.

A move is afoot to change that. Sen. Charles E. Schumer, D-N.Y., who was joined by Sens. Barbara Boxer, D-Calif., and Claire McCaskill, D-Mo., wrote the Raechel and Jacqueline Houck Safe Rental Car Act of 2011, which was named after sisters who died in a head-on crash in October 2004 after Enterprise Rent-A-Car rented them a Chrysler PT Cruiser. Tragedy turned to outrage when investigators learned that Enterprise received notice of a recall on the rented vehicle a month before the crash but opted to keep the vehicle on the road—renting it three times prior to the Houck crash. Independent investigators confirmed that the crash was a direct result of the ignored safety recall. After years of wrangling with the car-rental company, the girls’ parents received a $15 million settlement in 2010.

The senators, who at press time were targeting a November 2012 passage of the legislation, were prompted to restrict the rental of recalled vehicles after the Houck family and Consumers for Auto Reliability and Safety, which is a consumer advocacy group, alerted them to the issue.

In the House, Rep. Lois Capps, D-Calif., introduced in 2012 similar legislation that has bipartisan support. She hopes to have the bill passed by the end of 2012, although she admits that Congress’ lame-duck session could derail the legislation. If so, she says she plans to reintroduce the bill in 2013.

Hertz agreed to back the federal legislation and signed a pledge that was submitted by Boxer in May 2012 to immediately and permanently stop the rental or sale of any vehicle that’s under recall. Hertz tells us the company has a longstanding policy against renting recalled vehicles, which was reason enough to sign the pledge. 

But the other major companies—Avis Budget Group, Dollar Thrifty Automotive Group and Enterprise Holdings—refused to sign Boxer’s pledge, and it wasn’t until 4 months later, in September 2012, that they agreed to the legislation. In the interim, those companies had floated their own proposal that stated, in part, that the legislation was unfair, because limousines and taxis should abide by the same safety-recall restrictions that the federal bills propose. We agree that these industries should be regulated in the same way, but that strikes us as a weak reason to sidestep the issue of using recalled cars. As the cliche goes, “two wrongs don’t make a right.”

Enterprise says it decided to back the legislation after hearing from its customers. (In late August 2012, Hertz announced that it would buy Dollar Thrifty. That deal is expected to go through at the end of 2012, but Dollar Thrifty’s management remains separate until then.) 

 

Boxer told Consumers Digest in an email that any company that wouldn’t agree to her basic safety pledge was putting its consumers’ lives at risk. We agree, and we wonder why it took so long for the other car-rental companies to reach the same conclusion. Capps asks, “Are you going to put your life in the hands of the rental companies themselves? Are they more interested in your safety or their bottom line?” We believe that this type of consumer-safety issue should be a no-brainer.

The legislation requires that vehicles that are recalled will be grounded no later than 24 hours after the car-rental company gets the recall notice. (Companies that have more than 5,000 vehicles in their fleet will have up to 48 hours.) Further, National Highway Traffic Safety Administration will, for the first time, have the authority to investigate and police car-rental companies’ recall-safety practices.

The Senate legislation that was endorsed in September includes revisions from earlier bills that were introduced by Schumer and Boxer. One such revision allows an exception to the bill’s stipulation that recalled vehicles may not be sold until the vehicles are fixed. The change would allow car-rental companies to sell a recalled vehicle that has a junk title for parts or scrap. 

Further, if a manufacturer’s recall notice specifies temporary steps that can be taken to eliminate a recalled vehicle’s safety risk until new parts are available, a rental company may continue to rent the vehicle if those measures are put in place but then must pull it for repairs as soon as the parts arrive.

DOING DAMAGE. Being on the receiving end of an incorrect damage claim from the rental company can make your blood boil. Bernadette Del Chirao of Sacramento, Calif., rented a Ford Crown Victoria in 2012 at Honolulu International Airport. Del Chirao noticed a few scuffs on the bumper during a walk-around inspection with a car-rental employee. “He told me not to worry about the bumper, to just look at the body of the car,” she says.

A few days later, her family returned the vehicle to a different location, in downtown Honolulu, and the staff there told the family that the car-rental company would charge for damage to the bumper. The company later backed down without further incident, but, unfortunately, such stories are common. Ellen Timberlake-Volz of Arlington, Texas, was livid that a car-rental company charged her for a loose bumper and a dented hood that weren’t apparent when she returned the vehicles that she rented. Her complaints eventually led the company to drop the claim, but she smells a scam. “There are just too many people complaining about the exact same thing,” she says. “It’s just too much of a pattern.”

Elliott, who has written extensively about car-rental companies, says he hears up to 10 complaints per week that cite false damage claims. He says that in economic tough times, some car-rental managers try to boost damage claims to generate more revenue. Unsurprisingly, car-rental companies disagree: They say they lose money on damage claims.

 

The car-rental companies’ canned answers about the steps that they take to ensure that damage assessments are accurate do nothing to boost our confidence. Enterprise says it double-checks its records for accuracy. Avis says it has “taken a variety of steps to help ensure that we are able to accurately assess when a damage claim is necessary.” Sadly, the most specific that the company would get regarding those “steps” was another vague answer: They are “mostly in the area of vehicle walk-around inspections.”

Consequently, it makes sense to insist that any damage be documented in writing by the car-rental agency and to take pictures of any damage that you spot before you sign off on a rental if the agency won’t give you a different vehicle. If you receive an unfounded claim, Elliott suggests that you should call regional and corporate offices—you shouldn’t be shy about using social media to get a company’s attention—and you should contact your state’s insurance commissioner. National Association of Insurance Commissioners, naic.org, has contact information for each state insurance office.

PILING ON. Less dangerous than recall shenanigans are and less costly than trumped-up damage claims are, insurance charges and fuel fees nevertheless are the most easily identifiable sore points for consumers. 

To get insurance or not to get insurance: That’s a dilemma when you face a time crunch, lots of fine print and a car-rental clerk who pushes the coverage. You should know that car-rental insurance (referred to as “loss of damage waivers” or “collision damage waivers” in car-rental company-speak) often is unnecessary. Edgar Dworsky, who is a consumer advocate and the founder of consumer resource ConsumerWorld.org, says that in case of a collision, your personal automobile insurance typically will provide the primary coverage and the credit card with which you paid for the rental will be the backup. (We recommend calling your credit-card company before you travel to confirm the specifics of your coverage.)

You should know that in case of a collision, another charge lurks in the rental agreement’s insurance fine print: If you waive the car-rental company’s insurance coverage and are in an accident, the company will charge you for “loss of use” if it has to take a vehicle off the lot for inspection and repair. The charge, which typically is equal to your daily rental rate, applies for each day that the company can’t rent that vehicle. “Administrative” fees also might be assessed. 

Your personal automobile insurance policy or the credit card that you use for the rental transaction might include coverage for a car-rental company’s loss of a vehicle’s use, but that varies, depending on your policy and your credit-card issuer.  

All of the major car-rental companies also would like to sell you additional insurance coverage for personal belongings, medical expenses and liability. Elliott says this type of insurance is “highly profitable” for rental agencies, but none of it is necessary. Checking with your insurance carriers (including medical insurance carriers) beforehand will help you to determine whether to bite on these.

Refueling fees are another way that car-rental agencies can take advantage—under the guise of providing you with a convenience. If you return your vehicle without replenishing the fuel, companies will tack on fees in the range of $8–$10 per gallon.

You can prepay for the company to fill the tank for you upon return—typically at prices that are similar to what’s being charged in the area. This can be a convenient option for any rental, although you should know that you likely are donating to the company the cost of whatever amount of fuel that you don’t use. (Depending on the company, you might be able to be compensated for the amount of the prepayment that wasn’t needed to top off the tank, but you should be prepared to jump through hoops to do so. If the company has such an arrangement, you’ll have to have stipulated in your rental contract the exact amount of fuel that was in the vehicle when you picked it up.)

Robert M. Barton, who is president of American Car Rental Association, defends the high-fee practice by equating it with the convenience of valet service—having a car-rental employee pump fuel is a luxury decision. Maybe so, but we’re skeptical about the need for the car-rental companies to more than double at-pump prices.

TAXING TIMES. Car-rental companies are quick to point a finger at the government when it comes to charges that you pay at the counter. Charges that range from airport concession fees to tourism taxes to dollars for local stadiums and arenas are widespread. Barton says, with slight exaggeration, that such taxes are “straight out of 1776—taxation without representation.”

Sally Greenberg, who is the executive director of consumer-advocacy organization National Consumers League, agrees. She even sided with car-rental companies in February 2012 testimony before the House Judiciary Committee about taxes and fees that are charged to consumers, particularly at airports. “The fees are just oppressive,” she tells Consumers Digest.

An example of that taxation, Barton says, is San Mateo County, Calif., which passed a 2.5 percent car-rental tax in June 2012 to take advantage of the fact that San Francisco International Airport is in that county. Taxing visitors is more acceptable to residents, San Mateo County Supervisor Dave Pine admits. (Of course visitors can’t vote out county officials the way that residents can.)

Pine defends the piling on of car-rental taxes: “Visitors require the expenditure of public dollars, so it is reasonable to impose a small fee.” Unfortunately, it’s a habit that’s found at airport car-rental counters across the country. (See “Piling On: Airport Car-Rental Fees.”)

“It is just a mess and a consumer nightmare,” Dollar Thrifty’s Thompson says. “We try to disclose taxes, so our consumers don’t think we are a big, evil corporation.”

We found that some car-rental companies are less than clear about what your total cost will be. Some websites list only the rental price and make you click through several screens to find the actual cost after taxes and fees are added; others list this total beneath the rental price but in much smaller type.

We would sympathize more with car-rental companies being made the scapegoat for municipalities’ cash grab if unexpected taxes were the only complaint that consumers had with those companies. However, car-rental companies’ other practices far more frequently take consumers for a ride.

(more on Consumers Digest: http://bit.ly/10TpYb7)

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Katie Morell specializes in feature writing, breaking news and corporate communications.