Shortly after the 2025 International Car Rental Show closed out last year, I noticed a media firestorm erupting over car renters furious with AI-driven rental car scans that were assessing more damage on returns.

Car renters faced what appeared to be more frequent and higher fines that many claimed they didn’t cause, or if they did, weren’t severe enough to warrant fees rising into the hundreds of dollars.

One media outlet after another featured disgruntled car renters venting about AI and badmouthing car rental companies. It was a public relations setback for the industry, which could suffer reputational damage as car renters seek alternative ground transportation.

The public furor indicates how the industry has evolved from paper damage diagrams and manual inspections to digital photos, AI-powered image analysis, and automated scanning systems.

I resolved to make this a Topic A at ICRS 2026, which led to a panel discussion led by Nick DiPrima of Edgeball Strategies, who also penned a guest column on the topic last year. He was joined by Jeremy Martin of DAMAGE iD, Monty Merrill of GSP Transportation, Inc., Phil Spink of Sixt Rent A Car / Tom Wood Rental, and Shawn Concannon of TSD.

The panel included both rental car operators and AI damage technology experts who explored how to balance increased damage accuracy with questions about what car renters should cover.

My main takeaway from the discussion is that AI should not make the final decision on whether to charge renters for vehicle damage. Its imaging capabilities can be trusted, but the larger question resembles that of speeding enforcement: Should every driver going 66 mph in a 65-mph zone be penalized, or only those going 75-80 mph or more?

While a universal industry standard or practice may improve the industry’s overall image, a more effective solution would be to simply allow rental car companies to find their own balance and set their own policies. In the era of viral social media and consumer platforms, car renters will make clear which rental car companies follow fair policies.

Protecting the value of rental cars while minimizing loss of use should remain priority No. 1 for car rental operations. This can be done while maintaining customer trust, which ensures repeat business.

Here are the strongest points from the panelists' collective discussion that I believe rental car companies should follow when devising fair AI-based damage assessment policies.

Baseline Purposes

• As automation expands throughout the rental experience, operators must balance efficiency with customer service and transparency.
• The basic goal of damage recording remains: Operators still need to establish the vehicle's condition before and after the rental.
• The condition of a rental car directly determines its residual value and auction performance, making accurate damage detection vital throughout its lifecycle.
• Technology itself is neutral; the customer experience depends on the policies and processes surrounding its use.

Best Practices and Policies

• Operators should share vehicle images with customers at the start of the rental to demonstrate transparency, rather than using that information only at the end of the rental.
• Operators should deploy technology in ways that enhance customer service rather than fueling the perception that they are looking for reasons to charge customers.
• Rental companies should set clear policies defining which types of damage they will charge for and which they will absorb. Just because technology can detect more minor marks or scratches does not mean each one should trigger a reimbursement claim.

Helpful Tech Tips & Tools

• Real-time telematics and vehicle monitoring can help operators identify defects sooner and prevent damaged vehicles from being rented to the next customer.
• Damage detection technology should serve as an identification tool rather than automatically make decisions.
• Operators risk losing customer trust if they treat damage detection technology as a profit center rather than a cost-recovery tool.
• AI should be viewed as a detection tool that helps gather evidence rather than replace human judgment.
• The best use of damage detection technology is to improve consistency and documentation.
• Vehicle manufacturers are increasingly collecting data that could eventually play a major role in damage detection and claims management.

Diffusing Car Renter Confrontations

• Presenting damage findings as a 'change in condition' can help create a more constructive customer conversation.
• Make sure customers understand that automated inspection technology will document rental cars both at checkout and return.
• Damage detection technology is evolving rapidly and requires operators to remain flexible in adjusting policies to more advanced tools.
• Technology platforms must help operators convert large amounts of inspection data into practical business decisions.
• Find ways to communicate and educate customers about how inspection technologies work.
• Connected vehicle data and telematics may eventually identify when, where, and how damage occurs.

DIY Approach Can Bring Greater Rewards 

One note of caution: AI is advancing faster than legislation and regulation in many areas. With this issue now on politicians' radar, rental car operators should be vigilant against attempts to overregulate their practices. That may require efforts to lobby or publicly influence government regulators in the best interests of car renters.

Rental car companies can help create a more favorable climate by advertising and promoting their fair policies. A self-policing industry will face fewer hassles and less costly interference than one that is constantly negotiating or even fighting with government bodies.

One panelist mentioned a word that creates intangible goodwill and benefits for any business: Forgiven.

I still remember returning a rental car about 30 minutes late at an airport location many years ago. They did not charge me. I’ve always looked favorably on that company and rented from them again.

Any rental car operation or business must train employees to use common sense in sizing up situations and to forgive circumstances when justified.

You may never know exactly how that goodwill leads to more revenue over time, but it is still the right thing to do.