We’ve all seen the media coverage on the “scams” that rental car companies perpetrate on their clients. Yet how often does the public know about the indignities that befall car rental operators?
The car rental industry has experienced more than its fair share of cons pulled on it by unscrupulous customers, deceitful employees and even municipalities looking for easy tax targets to raise money for unrelated civic projects.
Here is an “around-the-world” view of some of the scams that befall car rental companies and tips on ways to prevent them. How many do you recognize from personal experience?
From the Outside In: Scams Generated by Car Renters
• The client rents a car and swaps parts from another vehicle, such as tires, airbags, batteries, wheels and even interiors. The client returns the rental and the agency is none the wiser.
TIP: This is all about good check in-and-out procedure. Don’t let your agents sit behind the counter and point out the stall number when the car goes out. When it comes back, don’t let them simply take the word of the customer. They must get off their chair and out the door!
• A thief gets into a car on the ready line, makes friends with the security folks at the gate, and simply drives off with a car.
TIP: Are you ‘testing’ your security procedures constantly? Do you have your security crew under video surveillance? Are you using “secret renters” to probe your weaknesses? If not, start.
• A long-time commercial account renter loses his job, yet still knows the “right thing to say” in getting a rental car on his former bosses’ tab. He then disappears with the car.
TIP: Make approving all rentals in advance part of your process. Address these issues in advance when setting up the corporate account. Challenge your corporate clients to think through security from both their and your perspectives. There’s no better time to bring this subject up than when you close the sale. It shows that you take the account, and the account’s processes, seriously.
• The existing customer calls the day before the car is due back, building trust, informing that they’ll need the car “just one more day.” Of course, the customer’s intention is to make off with the car for an extra week or three.
TIP: Management must be advised of all overdue vehicles, regardless of time overdue, personal relationships with clients or other excuses. “What management inspects, employees expect.” If they know you are serious about running your business by the book, they’ll avoid this trap.
• An insurance agent writes bogus policies to friends. The friends then weave their way through the car rental companies’ loss prevention policies to rent cars.
• A “claims adjuster” calls with just enough claim information to get a “direct bill” authorized for 10 days. The car is then rented to the “insured” who takes off with the car for parts unknown.
TIP: Insurance replacement deals, for smaller operators, are pretty rare occurrences. When an IR deal shows up, it pays not only to dig into the renter’s situation, but also turn it into a sales call. Scams such as the “bogus policy” play are easy to unravel if you are aware of them. As Ronald Reagan said, “Trust, but verify.”
• A call comes from an airline that authorizes its stranded employees to rent cars. “Just bill the airline,” the caller says. The customer shows up with bogus ID and takes off with a car.
TIP: Dig, dig, dig! It’s great when a new piece of business just shows up at the door, but you must dig further into who’s renting, who is going to pay and making sure to get purchase orders. [PAGEBREAK] From the Inside Out: Employee Scams
• At monthly meetings in which manager bonuses are paid out, the business manager writes checks to cash—for a few hundred dollars more than is actually paid out. He keeps the difference.
• The business manager creates duplicate copies of checks that are made out to vendors, though the actual check is made to cash.
TIP: How often are you spot-checking all your financials? How often do you look at cancelled checks that have come back from your bank, and reconcile them with your account register? Does your business manager brag about making money playing the ponies? There are a dozen ways to avoid financial malfeasance by your business management department, and most of them involve simple common sense.
• A rental manager with car privileges puts a reservation in the computer for a luxury/premium vehicle for an hour before closing, knowing that the reservation won’t show. Naturally he’ll drive the nice car home. In the meantime other renters were turned down for that car because it was reserved.
TIP: How often are you spot-checking who is driving what vehicle at what time? Do you have strict rules that are enforced about non-revenue tickets, and further enforce the rule that nothing goes off the lot without an “in-transit” contract, or a non-revenue ticket? Do you review them regularly?
• A car sale manager gets a kickback from dealers. A tell-tale sign—the majority of sales go to one buyer.
TIP: Look at your car sale registers religiously. Further, spot check your sale prices with verifiable auction reports such as Kelly Blue Book to make sure you are getting the right money for your units. If you are a small to medium operator, don’t just assume that your car sale department is on “auto pilot.” You need to make sure you have a relationship with your major buyers.
• In the same vein, a maintenance manager gets inflated repair bills in exchange for kickbacks.
TIP: Is all your business going to one shop? Do you find that your maintenance manager is doing lots of social things such as golf outings with your service providers? Going overboard with a vendor relationship could be a sign of trouble.
• Units or parts have a tendency to disappear from storage yards. If it’s not an employee, it may be an employee’s friend who has been tipped off that the cars will be accessible and unlocked in a remote, unlit part of the lot.
TIP: Change up your processes on a regular basis. Further, lot checks should be done daily without fail to make sure that everyone on the property is security-conscious. Further, when parts are found missing, make a big deal of it.
• The employee fills up his or her car, or a boyfriend or girlfriend’s car, on the RAC’s nickel. Sometimes employees will even pump gas out of sold units into their own cars.
TIP: Who has access to the gas card or gas pump? You wouldn’t leave the keys to the Coke machine in the lock, would you? Why don’t you secure your fuel as much as you would your refreshments?
• A car rental company owner runs a contest for upgrades or counter products. The employee lowers the base rate of the car, and allocates the difference between a little and a big car to an upgrade or CDW sales.
TIP: Compensation plans drive behaviors. If you over-emphasize ancillary sales, you’ll get bad behaviors. The business of renting cars requires a balanced approach, so why focus on just one or two issues?
• For the same contest, an agent might book his or her own reservation for an economy car and then substitute a walkup customer at a higher rate.
TIP: Run reports that describe “reservation taken” vs. “reservation actual,” or program your rental software to detect variances from the original plan.
• Employees often scam free rentals for themselves. The contracts for units out on Sunday have a tendency to get voided when the cars come back safe on Monday morning. This old scam not only involves employees, but employees’ friends, relatives and folks they owe money to.
TIP: Do an audit on a Sunday afternoon, without disclosing the results to anybody else, and then repeat the exercise 24 hours later. See how many contracts were voided.
Mike Kane is the President of VRCG Inc., a consulting firm in Southfield, Mich. His company’s motto, if it had one, would be: “Be pretty good at all parts of your business and you’ll do just fine.” Kane has agreed to be an ongoing contributor to Auto Rental News.