Schumer Demands Fix to 'Dangerous' Rental Car Loophole

Mother: Safe Rental Car Act would've saved my daughters' lives.

November 15, 2010, 5:25 PM

March 2, 2011— -- U.S. Senator Charles Schumer introduced new legislation today that would restrict rental car agencies from renting out cars that are under safety recall, saying the lack of such regulation "boggles the mind."

"Rental car companies should be immediately barred from renting cars that would be pulled from showrooms and car dealer lots because of safety recall concerns," Schumer, D-New York, told reporters. "It's wrong, it's dangerous and it must be stopped."

Under current law, auto dealers cannot sell cars that have been recalled, but the restriction does not extend to rental car agencies. According to one California mother, a bill like the one introduced today could have saved her daughters' lives.

Cally Houck's two daughters, 24-year-old Raechel and 20-year-old Jacquie, were killed in 2004 when the Chrysler PT Cruiser they rented from Enterprise suddenly caught fire before crashing into an oncoming semi-tractor trailer. The car had been under a safety recall for the potential fire hazard, but was still given out to the Houcks. After their daughters were killed, the Houcks sued Enterprise, and after a lengthy legal fight, the company admitted negligence and was required to pay $15 million in damages to the family.

"I don't want my daughters to have lost their lives for nothing... [The bill] will prevent other families from going through the same grief and the same loss," Cally Houck told ABC News. "It certainly means that if we can redeem the loss at all, that this is a good way to do it."

After ABC News reported on "Good Morning America" in July on the death of the two California sisters, the National Highway Traffic Safety Administration conducted a survey of three major rental car companies -- Hertz, Enterprise which owns National and Alamo, and Avis/Budget -- and found that in recall launches from June 2006 through July 2010, they all routinely allowed customers to drive off in cars that have been recalled.

Schumer, who referenced the Houck's story and the NHTSA survey in his announcement, said the new legislation was "common sense."

"This bill is just plain common sense -- rental car companies should not be in the business of renting cars that pose serious risks to drivers and passengers," he said.

Enterprise: Bill Based on Historical Data, Not Current Policy

In the NHTSA survey, the best overall performance came from Enterprise. In a study of 10 General Motors and Chrysler recalls launched between June 2006 and July 2010, after 90 days, Enterprise had fixed an average of 65 percent of the cars subject to the recall.

For Avis/Budget, 53 percent of the cars were fixed within 90 days of the recall. At Hertz, only 34 percent of the recalled cars had been fixed within 90 days.

The rental companies disputed the survey findings, saying they pick and choose which recalls are most important, and have a high rate of fix for the most serious problems. Hertz told ABC News that since the end of the study in 2010, it has dramatically changed its policy to ground any cars that are under recall and said today it supported a federal review of rental practices and welcomed a national standard for recalled rental cars.

A representative for Enterprise said the proposed bill is based on "historical" data and that under the company's current policy, "virtually all" cars under recall are grounded until they are fixed.

"The safety of our customers is our top priority and it is the most fundamental aspect of our commitment to do business responsibly," Enterprise spokesperson Laura Bryant told ABC News. "[The NHTSA survey] is not indicative of where the industry is today."

Bryant said the company receives thousands of recalls issued every year with no differentiation for the severity of the issue. The company bases the rare exceptions in which cars under recall on not grounded on information provided by the car manufacturer. With respect to the Houck's case, Bryant said renting out that car today would be against the current policy.

The proposed bill would force the rental car companies to ground all cars under recall, without exception.

"Any compromise with the industry that doesn't include total prohibition until those cars are repaired is meaningless," Cally Houck said.

"They cannot pick and choose," Clarence Ditlow, executive director of the Center for Auto Safety, told ABC News last week. "They're gambling with your life."

Until legislation is enacted, however, Ditlow said the best recourse for consumers is to simply ask rental car agents if their vehicle is subject to an outstanding safety recall.

"If they don't tell you, they're deceiving you and if they won't tell you, just go to another company, go to another counter," said Ditlow. "They're all right there in the airport, this is a free market, pick somebody who's more responsible."

A representative from Avis/Budget did not respond to requests for comment on this report.

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