Who: Competition and Markets Authority
Where: United Kingdom
When: 13 July 2015
Law stated as at: 6 August 2015
The Competition and Markets Authority (“CMA”) has published a report on short-term car rental in the EU (the “Report”). The Report sets out the application of the relevant consumer legislation to the short-term car rental sector, and includes the CMA’s analysis of the consumer issues which it has identified in this sector. The Report spans the pan-European market, to reflect the fact that the major car rental companies are transnational and there is a significant amount of cross-border activity in this sector.
The issues identified by the CMA include:
- A lack of transparency about the total price and the rental terms and conditions when making a booking;
- The way in which additional waiver and insurance products are sold by car rental companies
- The unfairness of fuel policies;
- The inadequate assessment of vehicle damage, including how disputes are dealt with and the charges that are levied; and
- The charging of additional payments to consumers after the rental period has expired, without prior warning, adequate explanation, or supporting evidence.
The CMA (working alongside the European Commission and its consumer protection counterparts from other member states) has engaged with five of Europe’s leading car rental companies (Avis Budget, Enterprise Rent-a-Car, Eurocar, Sixt and Hertz), each of which have committed to implement (within six months) measures to address the issues identified. These measures include:
- improving transparency in online booking processes;
- providing better information at the booking stage about optional waiver and insurance products, including their prices, exclusions and applicable excesses;
- more transparent fuel policies;
- being upfront about pre- and post- rental vehicle inspection processes and how potential disputes about damage can be minimised; and
- improving the practices for taking additional charges from consumers, ensuring that consumers are given reasonable opportunity to challenge damage and repair charges before payment is taken from their credit or debit cards.
In the UK, the CMA has also worked closely with the trade association the British Vehicle Rental and Leasing Association (the “BVRLA”) in revising its Code of Conduct, to which the companies representing the vast majority of the UK car rental fleets are signatories.
The revised Code of Conduct, due to be launched at the beginning of 2016, will include significant improvements similar to the commitments made by the leading car rental companies set out above. At a European level the CMA, European Commission and enforcement authorities in other EU member states have worked with Leaseurope (the umbrella body for the European car rental trade associations) in revising its Code of Best Practice to ensure it reflects the general principles underlying these commitments. Further guidance on its revised Code of Best Practice is due to be published by Leaseurope in the next few months.
Why this matters:
The commitments to higher standards made by the five leading car rental companies and the improvements made to the BVRLA Code of Conduct sets a benchmark for others operating in the sector to follow. The CMA has indicated that it expects intermediaries such as brokers, price comparison websites and travel websites to take note of the Report, in particular the need to ensure transparency during the booking process of prices, optional extras and rental terms and conditions, and the CMA expects car rental companies to use their best endeavors to ensure that brokers, intermediaries, franchisees and licensees comply with consumer protection law and adopt the standards to which the car rental companies have committed.
Car rental companies operating in the UK should also be aware that further scrutiny in the sector may not be restricted to the CMA: the Consumer Protection Partnership (the “CPP”), which brings together UK consumer protection organisations to jointly identify and prioritise areas where consumers are caused and co-ordinate collective action to tackle such harm, has identified the car-rental sector as a CPP priority for 2015.