Rental car companies agree to refrain from selling, renting recalled vehicles prior to repair

September 27, 2012,

888752_lions_mouth.jpgRecently, the auto rental industry formally agreed to refrain from selling or renting recalled vehicles to consumers before they have been repaired. USA Today reports that two senators - Charles Schumer of New York and Barbara Boxer of California - have also sponsored a new law that would make such sales and rentals illegal. Rosemary Shahan, president of Consumers for Auto Reliability and Safety, said the agreement "moves us far down the long road toward rental car reform."

In August 2011, a petition was filed with the Federal Trade Commission by two auto safety advocacy organizations and the mother of two girls killed in the crash of a defective rental vehicle. The petition was aimed at Enterprise Rent-A-Car and its owner, Enterprise Holdings. Company employees reportedly admitted that company procedures allow them to rent these un-repaired vehicles to consumers without even informing them. According to the testimony of a company manager, "There is nothing in place that keeps an employee from renting that car... Enterprise's corporate offices looked the other way regarding this fact."

The parent company, Enterprise Holdings, also owns two other rental car businesses: National and Alamo. They are the largest provider of rental vehicles in North America.

The two organizations who filed this petition to "remedy Enterprise's deceptive trade practices," are the Center for Auto Safety (CAS) and the Consumers for Auto Reliability and Safety (CARS), along with Carol S. Houck.

Houck's involvement stemmed from a 2004 accident which killed her daughters, Rachel and Jacqueline, who had rented a PT Cruiser from Enterprise in California. That particular model had already been subject to a recall for a power steering hose defect. Although the defect had been shown to cause fires, Enterprise did not send the car for repairs. They also never mentioned the defect or the recall to the two victims.

The rented PT Cruiser did catch fire while the two women were driving on the highway. The fire caused a loss of steering control, which resulted in a head-on collision with a semi-truck Both women were pronounced dead at the scene.

Houck's wrongful death suit against Enterprise was settled after five long years of litigation. Enterprise finally admitted to 100% liability in the two girls' deaths, and a trial verdict awarded Ms. Houck $15 million. But Houck remained vigilant. "Justice has not been served," she said of the verdict. "Justice is making sure this never happens to another family. That's why the FTC must grant this petition."

In 1990, the FTC entered into a consent order with Budget Rent-A-Car for a similar issue. They targeted Budget's failure to inform consumers about the rental of defective vehicles subject to outstanding recalls which had neither been inspected nor repaired. This action against Budget was also the result of a CAS petition.

Now, with the new agreement in place, legislators and auto rental industry officials agree that consumers are safer under its terms. "We believe the end result is a solution that will give consumers additional confidence that rental cars are properly maintained and safe to drive," said Enterprise spokeswoman Laura Bryant.


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