Auto Focus

Should Peer-to-Peer Renters Pay Airport Car Rental Fees?

The question is central to the City of San Francisco’s lawsuit against Turo for operating without a permit at San Francisco International Airport.

The city of San Francisco is suing Turo for continuing to operate at San Francisco International Airport (SFO) without a permit, a requirement for all entities conducting commercial business at the airport.

Car rental companies are required to pick up and drop off customers at SFO’s rental car center, as well pass a fee of $18 per contract onto rental car customers for use of the AirTrain, the people mover that connects to the rental car center, and pay 10% of gross receipts above a certain threshold for SFO rental car transactions. Additionally, car rental companies occupying the rental car center must pay rent.

Photo courtesy of Turo.
Photo courtesy of Turo.

Turo, which defines itself as a peer-to-peer carsharing company, has been picking up and dropping off customers at terminal curbside without paying those fees. The company claims it does not to fall under the same definition of car rental, and should therefore be exempt from the same requirements.  

The lawsuit cites Turo’s website references to “car rentals at SFO Airport” and curbside pickup and drop off. By continuing to operate at SFO and access renters directly at the terminals, the lawsuit claims that Turo adds to airport traffic and compromises funding for facilities maintenance, while having an unfair advantage over the car rental companies that comply with the airport’s permitting requirements.  

Turo disagrees. Michelle Fang, Turo’s general counsel, notes that Turo does not itself own a fleet of cars, but rather enables peer-to-peer carsharing through an internet platform in the same way that eBay brokers auctions of third-party goods.

“Since 2010, California has a law in place that defines peer-to-peer carsharing, and we fall squarely within that,” says Fang. “Rental car laws are totally distinct from carsharing laws.”

Fang references AB 1851, which when enacted amended California insurance code to ensure that owners of private vehicles in “personal vehicle sharing programs” would not have their personal auto insurance invalidated as a result. The language of the legislation specifies that to be protected under the statute, revenue received by the vehicle’s owner from a personal sharing program should not exceed the annual expenses of owning and operating that vehicle.

Fang, who had previously litigated for eBay, also references federal law that excises internet platforms such as eBay from responsibility for the conduct of its users. “Federal law is clear that it’s not Turo conducting that activity, Turo is providing a platform for other entities to conduct that activity,” she says. “We’re in a very good and strong position via state law and federal law. It’s very clear we are not a rental car company.”

Along with the San Francisco city attorney and SFO, the American Car Rental Association contends that Turo is operating as a car rental company. Greg Scott, ACRA’s lobbyist, says that for-profit Turo facilitates daily car rental transactions for compensation and should therefore abide by the federal, state, and local laws governing car rental companies.

Scott points out that the California law was designed to rectify a specific issue with personal vehicle sharing programs and personal insurance — and says nothing about taxes and fees. “This law does not give Turo the right to avoid taxes at SFO or elsewhere,” he says.

As of 2016, Turo allows car rental companies to list vehicles on its platform, and in so doing allows rental companies to use their commercial insurance policies instead of Turo’s. Fang agrees that car rental companies using Turo’s platform should abide by the rules governing car rental companies at an airport.

Is there a workable real-world model in which rental company-provided vehicles on Turo’s platform can be charged appropriately per trip? Fang suggests that entities using Turo’s owner-provided insurance tool could be blocked online from airport transactions, for instance.

The lines are blurred further, however, in the evolving definition of vehicle owner for the purposes of peer-to-peer programs. A growing number of independent entrepreneurs are buying multiple vehicles and putting them on Turo’s platform with the intent to generate revenue — contrary to the revenue threshold requirements in the 2010 law.

Fang says Turo has continually tried to work with the airport on the permit issue. She says Turo has asked SFO to create a permit specific to carsharing, in which Turo would pay an airport trip fee similar to those paid by ride-hailing networks such as Uber and Lyft, but that has gone nowhere. Fang believes the major car rental companies are trying to litigate this new type of competition to death.

Scott says either Turo, the vehicle owner, or the Turo renter must take responsibility for paying airport fees — and abide by other consumer and safety protections that car rental companies must follow. “If there is a level playing field, we welcome Turo come on into the market and join ACRA,” he says.

Comments

  1. Michael [ February 1, 2018 @ 10:41AM ]

    Good editorial,Chris, but you have only scratched the surface regarding the perils of RAC Peer economy.

    Airbnb of Auto Rentals: What to Know Before You Rent

    Considering a Peer car rental and not sure where to begin? These tips will help you through the booking process, so you can select the best fit while shopping for your next car rental.

    When it comes to spending your hard-earned money and time-off, there’s no such thing as asking too many questions. This is especially true for private rentals because they are more complicated than most traditional transactions.

    Know the Fine Print: Ask for a copy of the Rental Contract prior to booking. These are the terms and conditions that will govern the responsibility of all the parties involved. For instance, are there any prohibited uses?
    Who may operate the vehicle? What about expense reimbursements? Insurance? Is there specific language regarding responsibility of loss of or damage to vehicle? How are disputes handled? A worthy contract will be a lengthy read, but it’s important rental conditions are clearly defined.

    Look for Authenticity by Contacting the Owner.
    How do you know who owns the car? I know this sounds silly, but the market is full of borrowed or brokered cars. Make sure the owner of the car being rented is in fact the owner of the listed vehicle. If you doubt the listing is legit, try doing a reverse image search on the pictures. Requesting proof of ownership can also help you avoid unforeseen problems like fake listings and scammers. Any reasonable owner will offer this information to a hard-earned client.

    Watch Out for Extra Fees. Ask for a list of all applicable post rental charges and how they are paid. Contract changes, administrative fees, excess time and mileage, taxes and fees, repair and replacement cost, cleaning, parking fines and tolls, to name a few. Save yourself from any unwanted surprises by knowing any additional costs associated with your rental up front.

    How are sales taxes collected? Peer sites do not charge sales or rental tax, but both say on their website taxes are the responsibility of the customer. Ask how these taxes are paid if not collected by the owner.

    How Does the Insurance Work? – Ask Questions:
    Insurance is complicated and different with each state. None of the Peer sites have an adequate explanation of insurance coverage. There are conflicting statements that make this a truly difficult and risky area. Admitted carriers? Primary or excess? Driver restrictions? Jurisdiction? Governing law? Limits? This potentially puts the renter at risk. Your best bet is to contact your personal vehicle insurance broker prior to booking and ask them if you are insured for hired or rented vehicles. Most personal auto policies exclude exotic rentals so be honest with your plans. A good broker will provide intelligent liability scenarios and answer questions about accident coverage.

    Privacy and Security: Is the vehicle equipped with any onboard technology such as GPS? If yes, then immediately reread the governing contract. Even small infractions (speeding) may cause you to unknowingly breach the contract, leaving you liable for accidents, breakdown expenses, and maintenance expenses.

    Also, stay away from neutral facilities for safety purposes. Conducting a rental transaction in a mall parking lot defies good common sense and personal safety.

    Manage Your Expectations: Have a back-up plan. When the car you booked months ago turns out to be a no-show or cancelled at the last minute, make sure you’re not caught in a scramble to find another rental. Peer firms are generally helpless in finding solutions to these difficult and often scenarios.

    The bottom line: every car owner has different rules and requirements from its renters, so it’s always a good idea to find out these things in advance.

  2. Jason Manelli [ February 2, 2018 @ 12:37PM ]

    Yes they should pay the same fees if they are renting cars at the airport. Government shouldn't play favorites - No Free Rides!

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Author Bio

Chris Brown

Executive Editor

Chris is the executive editor of Business Fleet Magazine and Auto Rental News. He covers all aspects of the fleet world.

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