Guest Post: Would a Rental Car Company Ever Give You a Recalled Car?

The Safe Rental Car Act of 2013—Common-Sense Legislation

When one reads that there’s currently a bill being passed called The Safe Rental Car Act of 2013, one’s immediate reaction is, “wait… we need legislation for this?”; apparently so.

rental car recalls

Right now, there’s legislation and rules in place that forbid car dealerships and rental car agencies from selling automobiles that have had a recall issued; however, there’s nothing in place that keeps them from renting cars that are under recall.

Legislation for the bill that will change this—also called The Raechel and Jaqueline Houch Safe Rental Car Act of 2013—was initiated long after two women named, ages 24 and 20, were tragically killed in an Enterprise rented Chrysler PT Cruiser that had been recalled 30 days prior; the vehicle spontaneously caught fire and hit a truck in 2004. It took until May 2012 for Enterprise to finally admit liability.

What the Bill Will Do

Basically, the bill will hold rental car companies up to the same safety and recall standards that automobile dealerships are currently under. This means that no automobiles under any kind of recall can be offered to rent and any vehicles that come under recall must be taken off the road no later than 24 hours after notice.

“You can’t rent a recalled vehicle to a consumer; that makes sense. There shouldn’t be any ifs, ands, or buts about that. It’s a simple solution to a problem that needs to be addressed,” states car safety expert Sean Kane.

While most major car rental companies have publicly come out in support of the new legislation, there has been a bit of push back on what should be allowed and what shouldn't. Basically, the argument hinges upon the difference between major recalls and minor recalls.

The Recall Technicality Argument

Major rental car agencies like Drivenow, Avis Budget Group, Hertz Global Holdings Inc, Dollar/Thrifty, and the American Car Rental Association have all agreed to support the legislation.

The pushback, however, has come from major players like Mitch Bainwol, CEO of the Alliance of Automobile Manufacturers and NADA President Peter Welch, who believe that there are technicality arguments to be made.

canyon road

Bainwol, specifically, does believe that grounding recalled vehicles is warranted and appropriate for direct owners, “but a broad, federal mandate grounding all vehicles regardless of the nature of the recall triggers potential negative impacts that consumer notifications would not. To minimize ‘out-of-service’ time, rental car companies will demand [and have demanded] ‘front of the line’ access to parts and service, which may force ordinary consumers—moms and dads driving their family vehicles—to the ‘back of the line’ for recall repairs.”

Basically, Bainwol’s argument here is that the general nature of the recall definition in the bill will ultimately pit rental agencies against consumers when a recall occurs. He goes on to say, “Once you federalize a voluntary agreement, you’ve introduced absolutely a ‘loss of use’ liability that by definition produces an economic incentive to treat Enterprise over other customers.”

Bainwol’s solution is essentially ‘give notifications about recall, not federal mandates’: “Fix the car, achieve the safety objective that we all share, and give notification… as we do to every other consumer who buys a car. The gap in the process right now is that when you rent the car there is no notification because the car companies receive the notification, not the rental company consumer.”

Siding with Bainwol is NADA President Peter Welch, who said in written testimony, “We agree that recalls, which require immediate repairs to system such as steering, fuel delivery, accelerator controls, or other crucial components, should not be rented to the public until the defect is remedied. On the other hand, many recalls are due to defects, or non-compliance with technical federal motor vehicle standards which, depending on the circumstances, may not render a vehicle unsafe to operate until a recall fix has been completed.”

As an example, Welch went on to describe one such recall on a front sunroof panel that was susceptible to cracking and breaking within extreme cold weather conditions, “While this recall could be of concern to a motorist in Minnesota in January, it is unlikely to cause harm to anyone in a warmer climate.”

A No-exception Kind of Bill

Despite these arguments, the bill—introduced in May by Senator Charles Schumer, D-N.Y.; Lisa Murkowski, R-Ala; Barbara Boxer, D-Calif.; and Claire McCaskill, D-Mo.—would require all cars under any kind of safety recall to be grounded 24-hour after a notice is issued. Vehicles may not be rented or sold until fixed and thoroughly cleared, though they would be allowed to be sold for scrap. In addition, the bill also grants authority to the NHTSA to fully police rental car agencies and how they handle recalls going forward.

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