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.[PAGEBREAK]

©iStockphoto.com/sjlocke

©iStockphoto.com/sjlocke

Nonsense, counter their employees. One of the criteria for getting promoted at some companies is the number of damage claims you handle, they say.

Workers also tell me they’re rewarded with bonuses for finding dings and dents long after the vehicle is returned. They insist damage claims are a significant source of profits to their employers.

I mentioned these issues to a friend who is an investigative reporter for one of the TV networks. He asked if I would pass along the names of some of these whistleblowers. I did. But when he phoned them, they either backed down or refused to repeat their assertions on camera.

When I started making calls about these problems on behalf of the Washington Post (for which I write a weekly consumer news column) I encountered the identical roadblock — my sources scattered.

Perhaps the most frustrating interview was with a senior executive, who freely admitted during a lengthy interview to paying associates bonuses for reporting damages. A day later, the executive emailed me, begging not to be included in the story. Especially the part about the bonuses.

“It would end my career,” the executive said. (I love my sources and would never do anything to hurt them. The executive’s name will go with me to the grave.)


Bogus Claims Hurt the Industry’s Reputation

How big of a problem do we have here? That’s hard to say. It’s challenging enough to figure out how many damage claims are handled annually by the car rental industry. What percentage of those are identified at the return, versus later? Difficult to say. How many of these late-reported damage claims are paid versus dropped? How much does the car rental industry collect in damage claims? It’s hard enough (practically impossible, in most cases) to get that information out of one car rental company, let alone the entire industry.

All we have are anecdotes. Lots of anecdotes. I receive an average of one allegedly bogus damage case a day. Sometimes I review the paperwork and side with the car rental company, sending my regrets to the unhappy consumer. Other times, I look at the bill, the photos and the correspondence, and politely ask my contacts at a car rental company if they’d like to review the claim. In nine out of 10 cases, the claim is then dropped, “in the interests of good customer service.”

But that just raises even more questions. If the claim is inflated or invalid, then why send it to the customer? Why back down from a legitimate collection unless you’re trying to hide something?

Takahashi is right; this has to end. Nothing would make me happier. But the party that would benefit the most from seeing this questionable practice end is the car rental industry.

I’ve seen what happens when trust between a company and its customer erodes. It’s awful. Customers grow to hate the businesses, and the companies, in turn, begin to think of their clients as nothing more than a walking dollar bills. No one wants to see the car rental business go down the same path as the airlines.


Fixing the Problem

There are two ways out of this mess. The industry can adopt a set of voluntary policies that will ensure the end to these abuses. Or, a few brave insiders reading this story can contact me, tell me the truth, and force the industry to change.

It’s not as hard as it sounds. For starters, you can commit to recording any damage when a vehicle is returned. Better yet, take a picture before and after the rental. Hertz is already doing this at some locations.

Mail your claims to your customer promptly. If a chip or scratch is discovered three weeks later, write it off. Make sure the bill is itemized, written in clear English, shows adequate proof (photos, repair records) and describes the appeals process.

And for goodness sakes, don’t threaten the customer. That never ends well.

In a perfect world, the major car rental companies would publicly embrace a series of best practices that would ensure only legitimate damage claims are pursued and that no one profits from them. I strongly believe this step would benefit the car rental industry and its customers.

But I’m afraid the industry has already chosen door No. 2. Want to know who is waiting behind it? My friend, the investigative reporter. He can’t wait to get his hands on this story.


Chrisopher Elliott

Chrisopher Elliott

About the Author

Christopher Elliott is the reader advocate for National Geographic Traveler and a syndicated columnist. He is co-founder of the Consumer Travel Alliance, a Washington, D.C.-based advocacy group for travelers. He recently authored a book and has appeared on numerous major TV news broadcast stations. He is also a former section editor of Travel Weekly. You can contact him at [email protected]


For additional articles and news from the Auto Rental News May/June magazine issue, click here.

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