FOR IMMEDIATE RELEASE: July 28, 2011
SCHUMER INTRODUCES BILL THAT WOULD BAN RENTAL CAR COMPANIES FROM RENTING RECALLED VEHICLES TO CONSUMERS
Today, U.S. Senator Charles E. Schumer (D-NY) officially introduced legislation today that would ban car rental companies from allowing consumers to rent or sell vehicles that are under manufacturer recall. While current law prohibits car dealerships from selling recalled vehicles to consumers, no law bans rental companies from doing the same or renting them to unsuspecting consumers. The Raechel and Jacqueline Houck Safe Rental Car Act of 2011, would keep unsafe rental cars that have been recalled off the road. Schumer’s bill is co-sponsored by Senator Richard Blumenthal, Senator Barbara Boxer, and Senator Dianne Feinstein.
“We are now one step closer to making sure that families who rent cars are not getting behind the wheel of a vehicle that could have a dangerous defect,” said Schumer. “This law will make it clear that if there is a defect in car it either gets fixed, or it doesn’t rented.”
Senator Blumenthal said, "Defective cars loaned or sold by rental car companies are an unconscionable danger to consumers and other drivers on the road. This commonsense legislation will hold rental car companies to the same safety standards that already exist for car dealerships, so that we help prevent tragic automobile accidents like the one involving Raechel and Jacqueline Houck."
Senator Boxer said, “Consumers have the right to expect that the cars and trucks they rent are safe and that companies are not renting them vehicles that have been recalled. We should honor the memory of Raechel and Jacqueline Houck by ensuring that no one will ever again unwittingly rent a vehicle that is under recall and unsafe to drive.”
Under current law, auto dealers are prohibited from selling a new car under recall unless the defect has been remedied, yet that same restriction does not apply to rental car companies, which are currently allowed to rent cars under recall before the relevant safety issue has been addressed. Schumer’s bill, named for sisters Raechel and Jacqueline Houck who died when their rental car caught fire and crashed as a result of a safety defect, would prohibit the rental of defective cars and trucks. The bill also would ensure that Federal and State authorities have the tools necessary to enforce the law and protect consumers.
There are over 1.6 million rental cars currently in service in the United States. Every year, the major rental companies sell off a significant percentage of their fleets. For example, last year the rental fleet average turnover was 86 percent, which means that rental companies sold a whopping 1.4 million cars – most only one to two years old. Rental companies own and control these cars from brand new to re-sale and are on notice of safety defects that should be fixed. Auto dealers are prohibited from selling new vehicles that are under recall; however, rental companies are permitted to sell recalled cars to auctions, wholesalers, or unsuspecting consumers without fixing them first. The Raechel and Jacqueline Houck Safe Rental Car Act prohibit this action by closing this loophole.
The bill also requires the National Highway Transportation Safety Board (NHTSA) to investigate sales of motor vehicles to rental companies without standard safety features. A 2009 Kansas City Star investigation revealed that rental companies were ordering new cars without standard safety features, such as side air bags. Consumers that rented or subsequently purchased these cars were never informed that standard safety equipment was not installed. It is unclear how widespread this practice is within the car rental industry. The Raechel and Jacqueline Houck Safe Rental Car Act would require NHTSA to investigate and report to Congress regarding sales of motor vehicles to rental companies without standard safety features.
Schumer’s legislation also requires NHTSA to investigate certain sales practices by rental companies. While NHTSA posts information on its website as soon as manufacturers report a safety defect (e.g., identifying make, model, year, problem), the actual safety recall, including written notification to vehicle owners, may not begin for several months. The bill would require NHTSA to investigate and report to Congress regarding sales by rental companies between the time a recall description is posted on the NHTSA website and the time the rental company receives official notification of the recall.
When a recall notice is issued for a particular vehicle, auto dealers are forbidden from selling the vehicle until it has been serviced and the issue that sparked the recall notice has been corrected. Rental car companies fall into a dangerous loophole that allows them to continue placing the same vehicles that would be barred from show rooms and dealer lots on the streets. A recent National Highway Traffic Safety Administration found that, on average, rental companies fix only about half their vehicles within 90 days from when the vehicles are recalled.
Unfortunately, the consequences of renting vehicles under safety recall have already proven tragic. Raechel and Jacquie Houck, sisters from California, died after they rented a Chrysler PT Cruiser that had been recalled because a possible leakage of power steering fluid could result in a fire under the hood of the car were killed when their rental car caught fire and slammed into an oncoming semi-tractor trailer. The victim’s mother, Cally Houck, sued Enterprise and was eventually awarded $15 million when the company admitted negligence.
Schumer’s legislation would also ensure that federal law enforcement has the necessary tools to enforce the new law by providing for civil penalties of up to $11,000 per day per violation and enforcement through the Federal Trade Commission and state Attorneys General. It would also require that the National Highway Traffic Safety Administration (NHTSA)investigate and report to Congress regarding sales of motor vehicles to rental companies without standard safety features. In addition, the bill would require NHTSA to investigate whether rental companies are selling cars between the time a recall description is posted on the NHTSA website and the time the rental company receives official notification of the recall.
The Raechel and Jacqueline Houck Safe Rental Car Act of 2011 is supported by Cally Houck, mother of Raechel and Jacqueline Houck; Advocates for Highway and Auto Safety; Center for Auto Safety; Consumer Action, Consumers for Auto Reliability and Safety; Consumer Federation of America; Consumers Union; National Association of Consumer Advocates; Trauma Foundation; and U.S. Public Interest Research Group.
Schumer’s Safe Rental Car Act will keep unsafe rental cars off of New York City and Long Island’s 183 rental car company lots. Here is how the numbers break down: