Rental car industry criticized for offering recalled vehicles

Enterprise Holdings, which has the WeCar vehicle-sharing program, is at the center of the push to ban the rental of vehicles facing recall.
Enterprise Holdings, which has the WeCar vehicle-sharing program, is at the center of the push to ban the rental of vehicles facing recall. (Mary Butkus)
By Ken Thomas
Wednesday, November 3, 2010

The Federal Trade Commission is being asked to explain why the rental car industry shouldn't have to live by the same rule that requires auto dealers to fix vehicles under recall notice before they can be sold.

Two consumer groups and a key lawmaker, Sen. Charles E. Schumer (D-N.Y.), have asked the FTC to force the country's largest rental company, Enterprise Holdings, to fix vehicles under recall before renting them out. Enterprise Holdings is the parent company of rental car companies Enterprise, National and Alamo.

Safety groups say most business travelers or those renting cars for long trips don't know whether the vehicle they pick up at the rental lot has been the subject of a recall, posing a potential safety threat. The issue has taken on more significance this year following a series of safety recalls by Toyota Motor and several large recalls involving other automakers.

Congress could get involved next year.

Schumer asked the FTC on Monday to change the practice across the rental car industry, telling the federal agency in a letter that "if automotive dealers are not allowed to sell recalled vehicles without first fixing the safety issues, then rental car companies should be held to the same standard."

"If a car is not safe enough to be bought and driven off the lot, then it is not safe enough to rent," Schumer wrote. Threatening legislation, he said that if the FTC "can't or won't act, Congress will."

In August, two groups, the Center for Auto Safety and Consumers for Auto Reliability and Safety, petitioned the FTC to direct Enterprise Holdings to change its policies and take recalled vehicles out of the rental fleet until they are fixed. They contend that rental car companies put off recall repairs to avoid hurting business.

"The concept is real simple. If the car is not on the road, it's losing money," said Clarence Ditlow, executive director of the Center for Auto Safety. "So they want to schedule a recall repair when it's convenient for them."

Enterprise Holdings, which has the nation's largest fleet with 1.1 million vehicles, said it parks vehicles and declines to rent them when auto manufacturers make that recommendation. Automakers typically tell owners to contact their dealers to schedule a service appointment but rarely tell all owners to stop driving their vehicles until they do so.

Enterprise spokeswoman Laura Bryant said the company's "practice frequently goes above and beyond what is required" and noted that Enterprise grounded more than 30,000 recalled Toyota and Pontiac vehicles this year. "In most cases, we place a 'hold' on recalled vehicles so they are not rented until the recall work is completed," she said.

The FTC declined to comment on the petition.

The requests followed a $15 million jury verdict in California this year that found Enterprise's failure to fix a recalled Chrysler PT Cruiser led to the deaths of two sisters, Raechel and Jacqueline Houck.

The PT Cruiser they rented had been recalled for a defective power steering hose that could cause engine fires. The car caught fire while the sisters traveled on a California highway in 2004, causing them to lose steering. The vehicle struck a semitrailer truck head-on, killing the two women. Enterprise later admitted to liability in their deaths, and the jury awarded the women's families $15 million in June.

The safety groups contend in the petition that Enterprise conducted "deceptive trade practices" by suggesting its vehicles are safe, well-maintained and reliable.

"A lot of consumers will go to a rental car company if they're going on a long trip. The concept is: 'I want to be sure I'm safe,' " said Ditlow. "The business practice is just wrong."

- Associated Press

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