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Legal Update: Rental Cars and Recalls

A mother who lost two daughters in a rental car crash in 2004 has made it her mission in life to ensure that the rental car industry is made to abide by federal safety regulations. Cally Houck’s daughters, Raechel, 24, and Jacqueline, 20, were killed when the power steering fluid in their rented Chrysler PT Cruiser leaked, caught fire and caused the car to go out of control. It smashed into the back of a semi-tractor trailer and burst into flames. Both girls died.

To make matters worse, the faulty PT Cruiser had been under a safety recall. Not only had the car not been repaired; it had been rented to three other people before the Houck sisters by Enterprise Rent-A-Car in Capitola, California.

Cally Houck later discovered that even though the rental car industry is the single biggest purchaser of new cars and the number one source of used cars in America, the car rental industry has to date avoided any regulation or oversight from the National Highway Traffic Safety Administration (NHTSA).

Hertz Reached an Agreement to Allow Government Oversight of Recall Compliance

The time when car rental companies can stay off the radar when it comes to safety regulations may soon be at an end. Hertz has reached an agreement with a safety group called Consumers for Auto Reliability and Safety, which actually asks Congress to:

  • Give the NHTSA authority over the rental companies’ recall practices
  • Allow NHTSA to prohibit rental companies from renting, leasing or selling recalled vehicles until they are fixed
  • Create rules that would stamp out the current car rental industry practice of delaying repairs to faulty and recalled vehicles. Documents given to NHTSA by both Chrysler and General Motors revealed the shocking fact that not one major auto-rental company in America fixes all its recalled vehicles within a year.

While the Chrysler and GM documents did not show how many faulty vehicles were rented out before being repaired, the American Car Rental Association (ACRA) is crying “foul” over the proposed new regulations. They say there’s no need for tighter laws and that other groups will not be subjected to the same controls.

The ACRA issued a response which said, “When we receive a recall notice from a manufacturer, we will not re-rent that vehicle until all repairs are completed.”

Cally Houck would clearly disagree, as did the jury that awarded her $50 million in the wrongful death lawsuit she filed against Enterprise Rent-a-Car. Perhaps with this in mind, the ACRA added to their statement by saying, “If a member makes an exception, it would only be when they are satisfied that the vehicle is safe to operate under the circumstances presented by the particular recall and based on information and direction provided by the manufacturer.”

The statement, which appears to be an attempt to shift liability to manufacturers, goes on to say that private car owners, taxi companies and limousine services are not subjected to the same kinds of regulations being proposed for the car rental industry.

Statistics Show Recalls Are a Serious Problem

Car accident injury attorneys and safety groups, as well as the NHTSA, say the sheer weight of numbers means increased regulation of the car rental industry is necessary. Some of the statistics make for very worrying reading for anyone who might be renting a car they would naturally assume to be safe. For example:

  • Hertz and Enterprise alone had almost 184,000 vehicles under recall in 2011 alone.
  • In 2010, Toyota announced a massive recall of vehicles due to a problem with accelerators that could potentially stick. When that happened, Hertz and Enterprise were forced to recall no fewer than 350,000 vehicles.
  • When Chrysler determined that a rental car fire in Florida had been caused by an electrical short circuit after engine coolant was drawn into a cooling fan motor connector, more than 100,000 2007 and 2008 Chrysler Sebrings and Dodge Avengers were recalled.
  • Avis Budget received a recall notice about a shift lever indicator fault on their 2009 Buick Enclaves, Chevrolet Cobalts and seven other types of vehicles used in their fleet. More than a year later, only 35% of those vehicles had been fixed.
  • NHTSA documents show that Hertz fixed just 18% of those same vehicles within 30 days of the recall, and after a year had only repaired 52% of the recalled cars.

Major car rental companies like Hertz, Avis Budget and Enterprise say the NHTSA data is inaccurate in a countless number of instances. Hertz Senior Vice-president Richard Broome says that in many cases, rental companies had sold on faulty cars before recall notices were issued. In other words, the rental companies didn’t know the cars were defective.

According to Broome, recalled cars are “grounded” and not rented out again until they are fixed. On the other hand, Enterprise Rent-a-Car spokesperson Laura Bryant paints a slightly different picture. She openly admits that “a team of senior executives…review recalls when there is an interim measure, and from time to time we may elect to use that interim solution to avoid stranding many travelers for no reason.”

Bryant points to a recall of hundreds of thousands of 2003 to 2010 Toyota over concerns about floor mats interfering with accelerator pedals. Rather than ground the fleet, the company simply removed all the floor mats.

Rental Car Companies Still Rent Out Cars That Have Been Recalled

The Government Accountability Office (GAO) spoke to the major car rental companies, including Hertz, Avis Budget and Enterprise as part of its June, 2011 report on vehicle recalls. According to the GAO, every car rental company makes their own decisions about vehicles in their fleet that have been subjected to a recall.

A soft hold means the company will decide to continue renting the vehicle until it can be fixed, while a hard hold means the vehicle is grounded until repairs are carried out. Hertz denies this practice. Broome said that 133,200 Hertz vehicles were recalled over the past two years, and “to the best of their knowledge,” none of those vehicles was rented out again until repairs were made.

According to Rosemary Shahan, president of Consumers for Auto Reliability and Safety, car rental lobbyists admitted that the companies they represent occasionally have to rent out cars under recall. The practice is especially prevalent on busy holiday weekends.

Shahan’s reaction was understandably fierce. “The rental car companies have been playing rental car roulette with their customers’ lives,” she said. “When they run out of safe vehicles, they want to be able to rent ones that are unsafe.”

Shahan was also highly critical of the industry practice of saving money by ordering vehicles without “basic, common safety equipment that has been proven to greatly reduce the risk of death or injury in a crash.” Features being abandoned in favor of a better bottom line include things like side curtain airbags and electronic traction control, both of which have proven track records in terms of safety, but neither of which are required by law.

When Raechel and Jacqueline Houck set out in their rented PT Cruiser, they had the right to expect the vehicle was safe. Instead, they were killed in what their mother said was essentially a ticking time bomb. While the company that rented the faulty vehicle has been made to pay, the industry has been slow to implement steps to ensure a similar tragedy doesn’t happen to someone else.

Reputable Portland personal injury attorneys welcome any legislation that will help save lives and reduce the number of injuries on Oregon roads. Accidents still happen every day, however, so if you’ve been the victim of a motor vehicle accident that wasn’t your fault, contact an experienced personal injury lawyer for a free consultation. They will answer your questions and advise you on the best course of action you and your family can take.