Car renters are often in new territory, driving unknown streets and coping with unfamiliar dilemmas, such as where to find parking close to their meeting site when they’re running late. Not knowing the tricks to driving in a new city leaves these drivers vulnerable to parking tickets.
In a perfect world, once a parking ticket is issued, the driver will inform the auto rental company and pay the fine when he or she drops off the car. While most clients are honest and pay their parking tickets, some feel free to toss the parking ticket away and not tell the rental company. "Many renters truly believe that if they receive a ticket while in a rental car, the issuing authorities will not be able to locate them and pursue this," says Bill Plamondon, president and CEO of San Antonio, Texas-based Advantage Rent A Car.
Violations Pile Up
In some cases, the auto rental company does not receive notice of the ticket until it is too late to charge the driver's credit card. If this happens time and time again, the charges, administrative fees and late fees can really pile up.
The typical rental transaction in the U.S. is valued at $180, according to research by Abrams Consulting Group. If the profit margin on one transaction is $20, "the average unpaid parking violation ($67) has the potential to wipe out the entire profit contribution of several transactions," says Dennis Round, president of Nashville-based Violation Management Services (VMS).
"The biggest problem is that different authorities have different rules," says Round. "With some, you can transfer the violation by providing the name and address of the renter. With others, the violation is nontransferable. In that case, the auto rental company pays the fine and then has to go after the customer."
"If the city will accept the customer's information and completely release us of responsibility, we submit the information. If not, we pay the citation," says Jason Logan, spokesperson for Dollar Thrifty Automotive Group. "We attempt to charge the customer's credit card or we bill the customer. If the customer does not pay, we use a collection agency."
When a customer does not pay a parking ticket, Advantage will pay the ticket to stop the late fees and penalties, says Plamondon. The company then uses a third party to collect the amount of the ticket plus any late fees, penalties and administrative fees.
The collection process can create tension between the rental companies and their customers. "When the auto rental company goes after the customer, it is unfortunately a negative interaction," Round says. "It's a customer service nightmare."