Rental Cars & Recalls: A Scary Combo

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When Raechel and Jacqueline Houck decided to rent a PT Cruiser for vacation, they couldn’t have known it would be the last car they’d ever drive.

Raechal was driving with her sister in the passenger seat when she lost the ability to steer and hit a truck on the highway, causing the car to catch fire. Both girls were killed in the accident.

Following this 2004 incident, the women’s parents filed a lawsuit against Enterprise Rent-A-Car, the company that had rented them the vehicle, on the grounds that the PT Cruiser model in question had actually been part of a large recall the month before. Sure enough, the parents won the lawsuit and the company had to pay them $15 million.

Yet six years later, there are still no rules in place to stop rental services from keeping recalled cars on the lot and renting them out to customers. As Clarence Ditlow, the executive director of the Center for Auto Safety, pointed out recently in an interview with the New York Times, federal law does prohibit car dealerships from selling “new vehicles” that have been recalled, but those rules do not apply for companies that just rent out those defective cars.

Instead, it simply falls upon the company to exercise its own best practices, and as Enterprise demonstrated during the trial over the Houck accident, those practices leave much to be desired.

According to testimony from a manager at Enterprise, “You've got to keep booking, because you don't know when you are going to get a car back. But then of course, you run short on vehicles, and if all you have are recalled vehicles on the lot, you rent them out. It was a given. The whole company did it."

Now, the Center for Auto Safety and another advocacy group, Consumers for Auto Reliability and Safety, have filed a joint petition urging the Federal Trade Commission to take an important early step in regulating Enterprise and its partner companies, Alamo Rent A Car and National Car Rental. Together, these three companies are responsible for about a third of all car rentals nationwide.

“The petition notes that a simple remedy is available and should be adopted by the company,” the Center for Auto Safety said in a press release.  “Once Enterprise receives the official notice of the recall, the affected vehicles should be immediately parked until fixed.  This is the same duty that new car dealers have been assigned by the federal Motor Vehicle Safety Act … and is appropriate for Enterprise under the circumstances.”

It is unclear at the moment whether the FTC will take up this cause, although they entered into a similar agreement with Budget Rent A Car in 1990. Enterprise, for its part, has already demonstrated an ability to change its practices in recent years, and told USA Today that under its current evaluation standards, the Houck sisters would not have been able to rent the PT Cruiser that led to their death.

The issue of who takes responsibility for recalled vehicles has become more relevant this past year, as companies such as Toyota (Stock Quote: TM), Honda (Stock Quote: HMC) and GM (Stock Quote: GM) announced massive recalls on hundreds of thousands of vehicles. Toyota in particular has come under fire for concealing vital information about the safety of its vehicles. But the last thing we want to worry about is whether the dealers are withholding information as well.

If you are concerned about the safety of a car that you are looking to rent or buy, research the model on the National Highway Traffic Safety Administration’s website to ensure that it has not been part of a previous recall. Also, be sure to check out MainStreet's regular coverage of product recalls.

—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.

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