According to an article in The Telegraph newspaper in the United Kingdom Sunday, Europcar, one of the largest rental companies in Europe paid its staff a bounty of £4 each time they spotted damage on a rental vehicle that was returned, regardless of whether a repair was actually warranted according to a whistleblower. This latest article comes on the heels of other recent articles which claim that Europcar is accused of systematically overbilling well over half a million customers for repairs over many years, in what could become one of the biggest consumer overcharging scandals in recent UK history.
UK Serious Fraud Office Launches Criminal Inquiry
The UK's Serious Fraud Office is preparing to begin a criminal inquiry into Europcar in the wake of a Telegraph investigation exposing potentially fraudulent charges for windshield and other repairs, which were inflated by up to 300%. The UK's Trading Standards office raided Europcar's head office on June 23rd. Evidence disclosed The Telegraph alleges that well over half a million Europcar customers were overcharged over the course of a decade as a result of secret pre-agreed deals between the firm and its suppliers, which directly financially benefit Europcar at the expense of the customer. A Europcar spokesman said that even on the basis of its own preliminary review "the implications of the investigation will be somewhere in the region of £30 million".
Massive Repair Overbillings
The Telegraph alleges, that if involved in an accident or scrape which falls outside of insurance coverage, Europcar customers are billed for an amount which is presented as the true cost of the repair, plus an administration fee. But evidence has emerged showing the repair prices are grossly inflated via secret pre-agreed deals between Europcar and suppliers, which directly financially benefit Europcar at the expense of the customer. Europcar agrees on a net price and a margin which it gets to keep, and customers are invoiced for the total "cost" of the work, including the pre-agreed margin. Once the customer bill is paid the supplier issues Europcar with a second invoice for the pre-agreed amount, which is the true cost of the work. It then issues a rebate for the difference between the first and second invoice, which Europcar keeps.
In one example a former Europcar customer, Zdenek Kramsky, was told by Europcar that the cost for a windscreen replacement was £615 plus VAT including an admin fee. But when he called the supplier, National Windscreens, for a quote for the same job he was told the true cost would be £176 plus VAT. He was told by an employee of National Windscreens that the reason for the difference in price was that Europcar agrees an inflated price with National Windscreens, and then receives a rebate for the difference at a later date.
A spokesman for Europcar said: "Europcar takes the allegations very seriously and is conducting a thorough internal investigation. The company is co-operating fully with Trading Standards in its investigations. It can make no further comment at this point."
Europcar Former Manager Tells All
In a subsequent article in the newspaper, Telegraph reporters located a former Europcar manager who stated, "I was not surprised to find we have been raided. Europcar should be held to account for ripping off its customers. It's dishonest and completely unacceptable". The company has, he claims, replaced brand loyalty and customer service with greed. He claims staff are being trained in hard-sell tactics known in the business as "put on and move on". These sneaky tricks of the trade are now netting top-selling agents bonuses averaging £30,000 a year and making many millions in increased profits for Europcar.
The former manager goes on to state, "Counter staff are expected to sell extra insurances or vehicle upgrades to one in three customers", says M. "If they don't meet their targets, they're fired," he claims. When a customer stands his ground and declines extra insurances, the former manager alleges that counter staff will sometimes add in these optional extras after the rental agreement has been signed.
The latest ruse he recounts is to find new damage when the car is returned and charge inflated prices for repairing it. "The returns team are measured by the amount of damage they find. The best teams find new damage on one in five returned vehicles. Agents earn £4 per vehicle for spotting damage and can make up to £1,000 per month in peak season. That's on top of their salary. Yet some scratches I can barely see".
Here at AutoSlash, we find these types of reports disheartening. While we take issue with certain industry practices, and call them out in this blog, the vast majority of rental companies run honest customer-focused business. Sure, there are a few bad apples here and there, but to hear that there is potentially a systematic effort to defraud customers by a certain company is not only alarming, but it tarnishes the entire industry. We hope that Europcar will clean up their act and run an honest operation in the future. Until then, we cannot in all good conscience recommend using them.