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." [PAGEBREAK] Outsourcing the Process
Dennis Round started VMS for the sole purpose of processing violations for auto rental companies. "Our company contracts with the auto rental company to process, pay and bill violations. We take the whole department out of the hands of the auto rental company," he says.
Companies forward any parking violation notices to VMS, which handles the rest. The service is free of charge to the rental company, because the driver who incurred the violation pays an administrative fee.
The rental company does not have to worry that its customers will be asked to pay huge fees, however. Round's company has established relationships with many municipalities, so certain fees can be reduced or eliminated. In many cases, the customer will pay only the cost of the ticket plus an administrative fee (up to $40). VMS can also request additional time for the client to pay the ticket without incurring late fees.
"Authorities like this process, because they receive their money quickly," says Round. "Rental companies like having this customer service problem solved at no cost, and the clients like that we can prevent additional penalties and increase the amount of time they have to pay the ticket. We keep in mind that the renters are our clients' customers and we treat them accordingly."
He says that most renters do pay their fines once they are contacted. Advantage uses VMS, and Plamondon says it has made a positive impact in collection of the debt and in customer service, as it shifts the collection process to a third party. "This gives the customer the perception that Advantage is not directly involved in the collections process," helping Advantage maintain positive relations with its customers, he says.
VMS recently worked with North Andover, Mass.-based TSD Rental Management to create an electronic link between TSD and VMS software. This link, which became available in December, allows TSD customers easy access to VMS's billing and processing services.
"VMS provides the rental company the date, time, plate number and plate state information. The company can then give VMS the name and contact information for the driver at the time the violation was issued," says TSD CEO Charles Grieco. "The interface TSD has developed automatically captures this uploaded information from VMS at specific time intervals and instantly sends the driver data back."
Parking Ticket Policies
Most auto rental companies have a clearly written policy for handling parking tickets included in the rental contract, which requires the driver to take responsibility for the ticket and pay the fine at the time of drop-off. If they do not, the RAC will charge the credit card for the cost of the ticket plus an administrative fee (anywhere from $25 to $100).
- Triangle Rent A Car: forwards all invoices to the driver for payment.
- Atwest Rent A Car Corp. (San Diego): charges a $45 fee.
- Rent4Less (Los Angeles): charges a $100 fee.
- Payless: at some locations, a third party subrogation company recovers any fees associated with unpaid violations, plus a service charge.
- Dollar Thrifty: charges a $25 fee.[PAGEBREAK]
Software Automates the Process
A computer software solution from Instaknow (South Plainfield, N.J.) is also available to handle parking violations automatically.
Instaknow has worked with "a very large auto rental company" to automate its management of toll and parking violations, according to CEO, Paul Khandekar.
Instaknow software reads the violations from a scanner, retrieves vehicle and driver information from the mainframe reservation system, finds the driver's address, then generates a letter to the driver and the authority that issued the violation.
Instaknow also tracks customer responses so that follow-up letters can be sent. The system generates a report for the manager showing the customers contacted, their responses and the amount of fees collected. When a payment is received, it is recorded automatically.
"There is no need to change your systems and no need to write code," says Khandekar. The software "learns" how to handle violations from examples of how an employee completes the process. Training takes a matter of hours or days, and the rental company decides how much or how little to automate the process.
The only staff involvement required is to check exceptions, such as when the license plate number does not match any car in the fleet, or the car was not rented out that day. "You need human intelligence only for complex exceptions," says Khandekar, "or if you want to do a spot check."
Instaknow speeds up the search process and eliminates data entry errors, so no customer receives a violation notice in error. Companies using the software reduce manual work by 80 percent, according to Khandekar, and often make back their investment in six to eight months.
Enforcement Gets Aggressive
The service and software solutions have made a timely entrance on the scene, as "increased enforcement [of parking regulations] is spreading," Round says.
Plamondon agrees. "Over the past several years, issuing authorities have become much more aggressive in the collection of old violations, all of which they have moved to owner responsibility," he explains.
This has been the case in Houston, where an ordinance was passed requiring auto rental companies to pay for parking tickets that drivers have ignored.
"Now the owner of the vehicle is responsible for the parking ticket," says Christine Conrad, a spokesperson for Enterprise. This puts rental companies in the position of having to collect from customers, which is not a great solution, she says.
Plamondon believes that increased cooperation between the issuing authorities and the rental companies will help alleviate the problem by closing the gap between the time the ticket was issued and the time the customer receives notification.