Budget Rent a Car under fire for damage bills

More customers of Budget Rent a Car are feeling ripped off and misled after a B.C. franchise group sold them accident “coverage,” then billed them thousands of dollars — full price — for damage to their rental vehicles.  

“I think it’s not fair,” said Korean student Soohyun Shim, who rented a vehicle from Budget in November. He said he was shocked to later find the coverage had significant conditions, which were in the fine print, but not explained.

“They didn’t tell me about that. Just they told me if car was damaged I could cover it, within $300 [maximum].”

Shim, a Korean student, rented a vehicle to drive from B.C. to Alberta to visit the Rockies, while he and his girlfriend were in Canada temporarily, studying English. 

At the downtown Vancouver Budget office, Shim said the agent told him if he paid an extra $100 for what’s called a loss damage waiver, he would be “covered” if he had an accident. 

“They didn’t tell me about the [fine print] rental agreement,” he said, adding he couldn’t read it anyway, even if he tried, because his English is poor.

Lack of understanding

Shim also said the agent didn't give him the pamphlet that explained the terms and conditions until after he'd signed all the paperwork.

“I was satisfied, because I bought the insurance... I didn't understand everything.”

In Alberta, he was broadsided in bad weather and then got a ticket for driving too fast toward the intersection.

Budget then told him he would have to pay $3,000 for damage repairs, because Budget’s terms and conditions said if the customer violates a law, the waiver he bought is void.

That differs from most collision coverage from insurance providers, like the Insurance Corporation of B.C., which said it would pay in those circumstances.

However, what the rental car companies sell is not actually insurance, which their contracts point out. Insurance is regulated — while these contracts are not — which means a consumer has less recourse in a dispute.

“I am here as a student; I don’t have enough monies,” said Shim. “Three thousand dollars is too much for me.  I was shocked.”

'Outrageous' treatment

Henry Sporn, whose family gave Shim and his girlfriend room and board in Vancouver, believes Budget took advantage of them.

“It’s shocking behaviour — particularly to do it to people coming from other countries — and taking advantage of their language deficiency. It’s absolutely outrageous,” said Sporn.

“If I had trouble understanding this, then they wouldn’t have had a chance, even if they’d been told about it.”

Loss damage waivers (LDWs) with conditions like that are standard in the rental car business. However, legal experts told Go Public the companies are obliged to point out those conditions to customers, so they understand before they sign.

“You have to draw people’s attention to this clause to these provisions in order for them to be enforceable,” said lawyer Scott Nicoll.

“If they haven’t drawn your attention to the paperwork and the fine print they are not entitled to rely on it, as a general principle of law.”

Earlier complaints, lawsuit

Nicoll is heading up a class action lawsuit against Budget Rent a Car of B.C. The lawsuit stemmed from Go Public stories in 2012, which revealed the company was doing its own damage assessments, then making more money doing the repairs in its own shop.

• From 2012: Budget Rent a Car accused of bilking customers
• More: Ex-employees reveal ripoffs at Budget Rent a Car
• Budget Rent a Car fraud claims probed by RCMP

Dozens of customers complained they had been grossly overcharged for minor repairs. Former employees went public to say customer ripoffs were intentional and systemic.

The group of B.C. outlets is also the subject of a large, ongoing investigation by B.C.’s consumer protection regulator. The probe began after Go Public’s earlier stories.

"I can tell you that there were a substantial number of allegations made, which turned this into a complex investigation with multiple complainants. Once the investigation is complete, I can assure you that we will make more information available,” said Consumer Protection BC spokeswoman Tatiana Chabeaux-Smith.

After the initial complaints, Budget said it would change its practices so that work would be done by independent facilities, from that point on.

Reverting to old practices?

But it appears to have reverted to its previous system in Shim’s case. Documents show Budget calculated the cost of damages to his rental vehicle and its repair shop then did the repairs.

“It raises the same questions about their practices that are raised in our class action litigation,” said Nicoll.

Paul Whidden, another customer who bought Budget’s LDW “coverage” in January, has been told he will have to pay more than $2,000 for a scrape on the side of a truck he rented. The final bill is still pending.

“These people think that they can get away with this stuff,” said Whidden.

“I think they probably are able to a lot of the time because they are dealing with people who are just too busy and too stressed out to be able to deal with it.”

Whidden had also paid for a LDW, because the truck was too big to be covered under his own B.C. vehicle insurance and he wanted coverage.

He claimed it wasn’t until after he signed – as he was leaving – when the agent mentioned the box of the truck wasn’t covered.

“If they actually told people up front that by the way there’s no insurance on the box of the truck, people would have time to think about it and say ‘I don’t think I’m going to do this.‘”

Budget’s spokesperson refused to explain why, in Shim’s case at least, the company reverted to its earlier practice of doing its own assessments and repairs — at the customer’s expense — after it promised it would stop.

“I would love to give you more information on that, but anything related to the lawsuit I am not able to speak on right now,” said Jason Lewis, director of sales and customer service.

Lewis directed us to documents filed by the company in the court case, which read, “The only work that continues to be performed within Budget B.C.’s repair facility is work that is not charged to customers…or on vehicles being repaired pursuant to LDW [loss damage waiver] coverage.”

In Shim’s case, the work was charged to him and he was denied LDW coverage, but the repairs were done in house anyway.

Money now refunded

Budget said it is now reimbursing Shim for most of the $3,000 he was charged.

“Mr. Shim will only be responsible for the $300 deductible,” said Lewis. “In wanting to provide great customer service, we went ahead and made that adjustment … and we have already reached out to Mr. Shim.”

However, Lewis said because Whidden was told the box of his rental truck was not covered, he will still have to pay the full cost of repairs. That amount is still being determined.

Nicoll suggested anyone renting a vehicle should use their own insurance or credit card coverage, instead of relying on the rental company’s loss damage waiver for protection. In B.C., residents can use their ICBC insurance for $10 a day.

“If you flip over the rental agreement and you look at the list of things you can do to mess up and to void your loss damage waiver you won’t have anything,” he said.

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