12th May 2018

CPPD Module 14: Car Hire

Consumers complain about car hire a lot and complaints to the UK European Consumer Centre (UKECC) are rising. Frustration with the industry is reflected in the language used in news headlines: ‘scandal’, ‘rip-off’, ‘racket’, ‘scam’. In this article, I’ll cover the main practices that fret consumers and reporters alike and what enforcers are doing about them.


By Max Malagoni
Manager at the Competition and Markets Authority
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Let’s start with the types of businesses that consumers deal with. Some companies supply the rental car. Avis-Budget, Enterprise, Europcar, Hertz and Sixt (the ‘Big 5’) dominate this part of the market, between them supplying two-thirds of European rentals and even more UK ones. Consumers don’t necessarily book direct with a supplier, though. They may book through a broker, allowing them to compare offers, make a payment and reserve a vehicle. They may also use a meta-search engine that allows them to compare offers and then passes them onto a supplier or broker.

The main consumer issues
Consumers may face problems with any of these businesses because things can go wrong at any stage of the ‘consumer journey’: search and booking, arrival at the supplier’s rental desk to pick up the car, and post-rental when the car is returned. Problems arise because of unclear information, the behaviour of staff at the rental desk or contract terms disadvantageous to the consumer.

While searching and booking, consumers need full, clear and accurate information so they can make informed choices about which deal best meets their needs. The main difficulty at this stage is the inability to access that information. For example, charges may be hidden or only revealed late in the booking process or at the rental desk. Key terms such as the excess and deposit amounts may not be explained prominently enough. These problems make it hard for consumers to find the best deal and can affect them whether their rental is in the UK or overseas.

Arriving at the rental desk to collect the vehicle, consumers sometimes complain that they are misled or pressurised into buying the supplier’s costly excess ‘insurance’ (strictly, not insurance but a waiver that reduces the consumer’s responsibility should the car be damaged). They may get a hard sales pitch, or be caught out by terms and conditions which say they must buy the insurance if they cannot cover the deposit or present the credit card that was used to make the booking. These problems are far more common overseas than in the UK.

Another issue at the rental desk is not getting the expected type or quality of car. For example, discovering that it is a smaller car or one with fewer features – like air conditioning – than the one that was booked. Consumers get annoyed when they are not fully compensated for this or are required to pay extra for an upgrade to get the key features that they thought they had already bought.

The biggest problem of all, however, happens after the car is returned. Some consumers find that additional payments have been taken from their credit card, without notification or explanation, to cover damage repairs. They either dispute responsibility for the damage or are shocked at the cost of the repair. This is the most complained-about issue whether the rental is in the UK or overseas.


Driving up standards
These types of practices are breaches of consumer protection law, notably the Consumer Protection from Unfair Trading Regulations 2008. They can cause significant consumer harm. They have also become widespread across the industry. In recent years, enforcers have had to intervene to raise standards.

The highest-profile case is Leicester City Trading Standards Service’s ongoing investigation into Europcar, following allegations that surfaced in June 2017 that the company had overcharged UK consumers for car repairs. In September 2017, the Advertising Standards Authority upheld a complaint about a Europcar claim: “the model you choose is the model you get. Guaranteed”. It ruled that this advertising was likely to mislead and should not be repeated in future unless the company could ensure that the models would always be available.

The Competition and Markets Authority (CMA) has spent several years tackling unfair practices in this market. In 2015, alongside its counterparts in EU member states and the European Commission, it began working with the Big 5 on a range of issues. This resulted in the Big 5 agreeing to show prices that include all compulsory charges, provide better information at the booking stage about deposit requirements and waiver products, give more upfront information about vehicle inspection processes, and improve their procedures for vehicle inspection (so consumers are notified of charges before payment is taken and have the chance to challenge them).

Also in 2015, the CMA helped the British Vehicle Rental and Leasing Association (BVRLA) to revise its Code of Conduct. The code covers both booking and rental-contract-related matters. It requires members to participate in the CTSI-approved BVRLA Conciliation Service and comply with its rulings. Over 270 UK-based suppliers are signatories to the code.

Following these actions to improve suppliers’ practices, in 2016 the CMA turned to the online brokers and meta-search engines. It worked with around 40 companies to significantly improve the accuracy and clarity of information available to consumers at the search and booking stage. In addition, in March 2018, three brokers signed formal undertakings to include all compulsory charges in their quotes and show all essential information such as excess and deposit amounts.

In March 2018, the CMA also announced a new phase of work. Following extensive complaints from consumers encountering hidden costs on collection of their car at airports abroad, the CMA is now taking enforcement action against businesses that are based overseas but are selling directly to UK consumers online.


Key things to watch out for

The different types of businesses can confuse consumers. When making complaints, they may be unclear which party they contracted with.

There will often be two contracts: a booking contract made in the UK when the consumer books in advance with a supplier or broker, and a rental contract made in the rental location when the consumer picks up the car. For overseas rentals, the booking contract is still subject to UK jurisdiction, but the rental contract probably won’t be.
The Big 5 operate franchise operations in many countries, so the consumer may be contracting with a company that is not directly part of one of these large businesses even though the rental carries their branding.

Big 5 brands include: Avis, Alamo, Budget, Dollar, Enterprise, Europcar, Firefly, Flizzr, Goldcar, Hertz, InterRent, National, Sixt, and Thrifty.

Advertised prices, including initial quotes, should include all compulsory charges. These charges include (where they apply): young driver surcharges, one-way fees, fuel surcharges, out-of-hours fees, airport surcharges, and taxes.

All suppliers and brokers should tell consumers during the booking process what the excess and deposit amounts will be. It’s often when these amounts are large that people feel pressurised into buying additional insurance since this will reduce their excess and deposit.

Suppliers should give consumers evidence of any damage and an explanation of how any charge was calculated. They should also give consumers prior notice before a card is charged.

If a consumer suffers a problem, the BVRLA conciliation service may be able to help if the rental was in the UK and the supplier is a member. If the rental was elsewhere in Europe, the conciliation service operated by Leaseurope may be able to help; all of the Big 5 are members.


Review the 8 questions below, and when you’re ready, submit your answers here

1. What companies make up the ‘Big 5’?

2. What is the main difficulty for consumers at the search and booking stages?

3. Which rental desk issue is more common overseas than in the UK?

4. Complaints about damage fall into two categories. What are they?

5. Which trading standards service is investigating Europcar and what is the investigation about?

6. How many online brokers and meta-search engines did the CMA work with and how many brokers signed undertakings?

7. How does the CMA’s next phase of work, starting in 2018, differ from its previous work?

8. For UK consumers, why might a booking contract be more open to UK enforcement action than a rental contract?

Applicants who complete the module successfully will be given a certificate.
The test must be taken by August 31st 2018.

If you have any questions, please email training@tsi.org.uk


CONTACT DETAILS
For more information on the CMA’s work, including its consumer law compliance summary for online car rental intermediaries and its advice to consumers, see www.gov.uk/cma-cases/car-rental-intermediaries.

The UK ECC’s consumer advice on car hire across the EU leaflet is at
www.ukecc.net/publications/leaflets.cfm.