Car hire firms to improve practices following competition review

http://www.theguardian.com/money/2015/jul/13/car-hire-firms-improve-practices-competition-review

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Millions of holidaymakers who hire a car abroad will soon enjoy better terms and conditions after five of the sector’s biggest firms agreed to make changes following concerns about hidden costs and “potentially unfair” practices.

The UK competition watchdog has led a Europe-wide review which has resulted in the five firms – Hertz, Avis Budget, Enterprise Rent-A-Car, Europcar and Sixt – agreeing to introduce improvements to areas that frequently lead to complaints, such as less-than-transparent pricing information, high-pressure sales tactics, fuel policies and damage inspections.

The Competition and Markets Authority (CMA) said it was keen to help motorists avoid “nasty surprises at the pick-up desk” in the UK and abroad, though with most of the improvements being introduced over the next six months they may not be in place in time to benefit those people about to set off on their summer holidays.

The CMA said there had been a “steady increase” in cross-border complaints received by European consumer bodies about car rentals, with Spain a particular hotspot for problems. It led a review of the sector which uncovered a range of issues including:

• A “lack of transparency” on pricing and contract terms – for example, where the headline price appears low but extra compulsory charges are added late in the booking process or at the pick-up desk, resulting in a “much higher” final price. The watchdog said: “In reality, consumers may have little option but to pay or incur significant switching costs.”

• The way in which people are persuaded, particularly at the pick-up desk, to buy additional “waiver” and insurance products, typically to cover the excess not covered by the basic insurance. The CMA said it had identified concerns that in some cases insurance that consumers did not want or need was added either during the booking process or at the pick-up desk, and that in some cases people felt “pressured” into buying.

• The “lack of transparency and potential unfairness” of some car rental firms’ policies on fuel. Some firms operating in Spain make drivers pay up front for a full tank of fuel, then insist they return the car empty.

• How vehicle damage is assessed and charged for, and how disputes are dealt with. One of the biggest areas of complaint is where motorists are charged for damage they say they did not cause. Holidaymakers frequently report extra payments being taken without warning from their credit or debit card after they have returned home, ostensibly to cover damage to the vehicle or traffic fines.

The CMA said each of the five companies had committed to make changes to their practices that included one or more of the following: improved transparency when making a website booking, with more and clearer information about any surcharges and the cost of optional extras; better information at the booking stage about optional waiver and insurance products, including prices, exclusions and excesses; more transparent fuel policies; more upfront information about how pre- and post-rental vehicle inspections work; ensuring customers are given a reasonable opportunity to challenge any damage or repair charges before a payment is taken from their credit or debit card; and better information on booking websites about local traffic rules and regulations in the rental country.

Nisha Arora, a CMA senior director, said: “These changes go a long way to ensuring that consumers know exactly what they are getting when they rent a car … The improvements by these five businesses now set a benchmark for the rest of the industry to follow.”