Europcar taken to court by ACCC over ‘unfair’ contracts and misleading conduct

ANYONE who has ever hired a car knows the anxiety. The contracts might as well say, ‘You scratch it you bought it.’ That could be about to change.

Europcar pick-up & vehicle return signs at local franchise of car rental film, in Melbourne.

ANYONE who has ever hired a car knows the anxiety of the pre-return inspection. After all, the contracts might as well say, ‘You scratch it you bought it.’ That could be about to change.

The consumer watchdog is taking vehicle rental business Europcar to court over what it claims are unfair contract terms which could open up consumers to excessive liabilities for damage.

Australian Competition and Consumer Commission chair Rod Sims says Europcar’s standard consumer contracts contain terms that, if applied, impose “unlimited liability on consumers in certain situations”.

“Vehicle rental contracts are complex in nature and are often entered into during time-sensitive situations, such as airport departures,” Mr Sims said.

“Consumers have little time to properly assess their rights and obligations under these rental agreements, and no opportunity to negotiate.”

The ACCC says the following terms in Europcar’s standard vehicle rental contract are unfair and should be declared void:

• terms requiring consumers to pay Europcar a “damage liability fee” (currently up to $3,650) if the rental vehicle is damaged or stolen, or if there is third party loss, irrespective of fault; and

• terms making the consumer fully liable to Europcar if the rental vehicle is damaged or stolen, or if there is third party loss, where a consumer breaches the rental contract, no matter how trivial the breach and regardless of whether the breach caused the damage or loss.

Under Australian Consumer Law, a contract term is considered unfair if it would cause significant imbalance in the parties’ rights and obligations; is not reasonably necessary; and would cause detriment to a part if it were applied.

The ACCC also alleges Europcar has engaged in misleading and deceptive conduct and made false or misleading representations on its website regarding the liability cover provided to customers, and the maximum amount customers would be liable for if there was loss or damage to the rental vehicle.

The matter is listed for a directions hearing on 5 February 2015 in Perth’s Federal Court. The ACCC is seeking declarations, injunctions, penalties, orders for the publication of corrective notices and compliance program orders.

UPDATE: Europcar has issued the following statement to news.com.au:

“Europcar has invested substantial resources in making the booking process fully transparent and user friendly and has attempted to engage with the ACCC as part of an industry-wide review and enquiry into the car rental industry. We are disappointed that the ACCC has taken this action and it will be robustly defended.

“In particular, Europcar rejects comments in the ACCC’s media statement that, irrespective of fault, charging the Damage Liability Fee for damage, theft or third party loss is unfair and it will strenuously oppose any attempt by the ACCC to prevent Europcar charging this fee. Full details will be set out in Europcar’s defence when the matter goes to court.

“The ACCC has also alleged that Europcar’s terms and conditions make a customer liable for a breach of the rental terms and conditions that may be trivial. It has always been Europcar policy that any potential breach of the Rental Contract is treated seriously and occurs only after review by senior management.

“It is also alleged that Europcar has engaged in misleading or deceptive conduct and made false or misleading representations on its website. These allegations are denied. Full disclosure of what a customer would be liable for if there is loss or damage to the rental vehicle or third party loss is contained on Europcar’s website.

“Europcar constantly strives to improve the experience of our customers and we are proud of our reputation for commitment to quality of service.”

[e-mail]

Originally published as Europcar taken to court by ACCC over ‘unfair’ contracts and misleading conduct