The Australian Competition and Consumer Commission has accepted a court enforceable undertaking from Hertz Australia Pty Ltd (Hertz) following an ACCC investigation into Hertz’s vehicle damage charging processes.
From 2013 to August 2015, Hertz represented to some of its customers that the vehicle that they had hired was damaged during their rental period, when in fact the damage was pre-existing. Hertz incorrectly invoiced and charged these customers for the vehicle damage.
Hertz also represented to some customers that the amount that they were charged to repair certain vehicle damage was Hertz’s actual repair cost, when in fact Hertz received repair discounts that it did not pass on to customers.
Hertz has acknowledged that its conduct was likely to have contravened the Australian Consumer Law prohibitions on misleading or deceptive conduct and false or misleading representations, and has provided a court enforceable undertaking to refund affected consumers and to take other steps to address the ACCC’s concerns.
“This case serves as a message to vehicle rental companies that they must have robust compliance procedures in place to ensure they do not contravene the Australian Consumer Law by incorrectly charging customers for damage they are not responsible for,” ACCC Deputy Chair Dr Michael Schaper said.
“Vehicle rental companies must also ensure that they are transparent and accurate in communicating with their customers about the charges they are applying for vehicle rentals and repairs.”
In response to the ACCC investigation, Hertz has taken voluntary steps to improve its damage charging and assessment practices, and has also provided an undertaking to the ACCC which include the following commitments:
- Hertz will contact and refund customers who were charged for pre-existing damage or overcharged for vehicle repairs due to errors in Hertz’s repair charging processes;
- Hertz will conduct thorough damage review processes prior to charging customers for suspected new vehicle damage to confirm that the damage is not pre-existing damage or existing “fair wear and tear”;
- Hertz will make improvements to its damage recording procedures to minimise the risk of pre-existing damage charging and overcharging for vehicle repairs; and
- Hertz will appoint an independent external auditor to monitor Hertz’s compliance with the undertaking.
This outcome is part of a wider ACCC review of the vehicle rental industry in Australia. As part of this review, the ACCC has been investigating various consumer issues, including misleading vehicle rental pricing and charging, and unfair contract terms in standard vehicle rental agreements.
It also follows recent ACCC court action against another vehicle rental company, Europcar Australia (CLA Trading Pty Ltd), in respect of alleged unfair contract terms and misleading advertising of its “extra cover” products. The parties are awaiting judgment in this matter.
The ACCC is continuing its vehicle rental review with broad engagement with the industry to address ongoing industry practices that raise consumer protection issues.