Bogus Claims Hurt the Industry’s Reputation

Christopher Elliott, a traveler advocate, narrows in on damage claims that he says threaten customer trust.

In a special report to Auto Rental News, traveler’s advocate Christopher Elliott examines the car rental damage claims process based on his research and consumers’ complaint letters to him. For ARN Executive Editor Chris Brown’s editorial on damage claims that also appears in the May/June magazine issue, click here.


©iStockphoto.com/kirstypargeter
©iStockphoto.com/kirstypargeter

The complaint had a familiar ring to it: There was the mysterious damage bill received weeks after a rental, scant documentation to back it up, and when the customer questioned the charge, his case was quickly referred to a collection agency. A car rental representative also told Dan Takahashi he’d be added to the company’s “no rent” list if he didn’t pay promptly.

But this story doesn’t end the way most of them do — with the customer quickly settling, fearful that his credit score would suffer or that he’d never rent in this town again. Or, turning to me in desperation, hoping I’ll mediate the grievance.


Taking Matters into His Own Hands

Instead, Takahashi, who is a professor at the Medical College of Wisconsin, fought back. He asked his insurance company for help; it said the claim was “highly suspicious” even after the rental company sent him time-stamped photos of a black Toyota Camry with a dented bumper. He pushed for more detailed documents, filed complaints with the Better Business Bureau (BBB) and consulted with a lawyer.

“This needs to stop,” he told me.

Takahashi’s case is one of hundreds I receive every year as a consumer advocate — cases that expose the underside of this business and can probably only be solved with a concerted industry effort. The claims follow a troubling pattern:

  • They are mailed to customers weeks, and sometimes months, after the rental.
  • The bill is within a few dollars of $500, which is the typical insurance deductible.
  • There’s no meaningful appeals process, at least to the customer.
  • Failure to pay quickly is met with a referral to a collection agency or blacklisting — or both.

Oh, and one more thing: When the claims are challenged, as Takahashi did, they’re quickly abandoned. Within a few days of filing a BBB complaint and contacting his insurance company, he got a call and follow-up letter saying the company was closing his file. Apparently, the car rental company didn’t want a confrontation with an insurance company, the BBB or to end up in court.


An Industry-wide Problem

Which agency did Takahashi rent from? It could have been any company, because over the years I’ve seen bogus damage claims from all of them. Some are mentioned more often, others less. But I’m not going out on a limb by saying this is an industry-wide problem.

The auto rental business doesn’t deserve this. A vast majority of damage claims are handled by the book, which is to say, the dings and dents are recorded and acknowledged at the time the car is returned, the estimate is fair and the loss-of-use and diminution-of-value charges are well-reasoned and adequately explained to the customer.

They cover a company’s real losses, and nothing more.

So when car rental companies break away from convention — deciding that accidents should be a profit center — it affects the entire industry and its credibility, which casts a long shadow across the entire claims process.

Most car rental managers and employees can probably agree that it’s ethically questionable to profit from someone’s misfortune. At the very least, they’d tell you it’s wrong to lie. Yet that is exactly what’s happening here.

Have car rental companies ever said damage claims should be a profit center? No. But they didn’t have to; their customers have already connected the dots.


Let’s Go On the Record

Over the years, car rental insiders have sent me emails and left comments on my consumer advocacy blog saying that these allegations are essentially correct. Some car rental companies pursue every damage claim even when they aren’t sure who’s responsible, according to these employees. These companies inflate bills and treat the damage claim process as if it were a cash cow, the employees allege.

To which I say: Prove it.

As it turns out, that’s easier said than done. Car rental companies deny they engage in this kind of trickery. They say they shouldn’t be punished for trying to recover their damages and they promise every claim is on the up-and-up.

CONTINUED:  Bogus Claims Hurt the Industry’s Reputation
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Comments

  1. mRK [ May 2, 2012 @ 02:20PM ]

    Thanks for all you do Chris. The public needs you more than ever now.

  2. MasterChief [ May 21, 2012 @ 03:04PM ]

    If you come to Europe, we have the same problem here. Car Rental companies don't do themselves any favours. The European Commission and the Office of Fair Trading (OfT) in the England have reported disatisfactory reports on the industry and if you contact any consumer champion journalist from the national consumer media, they will tell you the car rental complaints from customers tops their list.

    A large Spanish company went bust earlier this year shrinking the inventory of vehicles in Spain by 18,000 cars. It is a product of a car industry in need of repair.

    While the top public Car Rental companies are reporting their best quarterly results, the customer is still suffering from very low trust in the industry all together.

    This is a broken model and surely one to watch as customers will eventually speak with their wallets.

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