Leicester Council's Trading Standards investigation into Europcar is bringing attention to questions around vehicle rental damage and pro-forma invoicing by fleets.
The investigation follows accusations published in the Daily Telegraph that Europcar has fraudulently overcharged its customers for repairs by inflating the consumer cost of windscreens and other measures. If true, its repair policy could be found to be in breach of both the Fraud Act 2016 and the Consumer Rights Act 2015.
A statement from Europcar said: 'The company is co-operating fully with Trading Standards in its investigations. We can make no further comment at this point.' According to Europcar's financial results for the first half of the year, the vehicle rental firm has set aside a sum of £40m in order to deal with possible litigation. Pro-forma invoicing involves hire companies issuing a document to drivers containing terms and conditions of the hire. Although considered an informal request for payment, it contains a clause to ensure that vehicle damage can be invoiced in advance of the repair being completed. This helps a rental company to better manage cashflow, especially in regards to VAT obligations upon raising the invoice.
A British Vehicle Rental and Leasing Association (BVRLA) spokesperson maintains that the organisation remains supportive of pro-forma invoicing. 'BVRLA members are required to provide justification for all charges raised and demonstrate a method of calculation for such charges' they said. 'They are not required to repair the damage and may refer to a damage charge matrix.' The BVRLA refused to provide any comment as to whether the industry should distance itself from pro-forma invoicing as a consequence of the Trading Standards investigation.
In 2014 Siemens moved away from pro-forma invoicing. Paul Tate, commodity manager at Siemens, said: 'It's possible the investigation will bring a spotlight back to this rental damage issue, which has always been a hot topic for fleets. I don't think pro-forma invoicing has been challenged in a court of law, [but] I think it's right that the topic is discussed. Rental companies are using this to sell additional services, too, like damage waivers and zero excess.'
He continued: 'Some rental companies will charge for damage they don't put right at the time. 'What we say is, if you don't repair it, you forgo your right to charge for the vehicle repairs. We spend £2.5 million a year on 2,000 rental cars and so the charges that were coming through were substantial.' Paul Tate suggests that rental companies should calculate accurate repair costs after the repair has been completed, splitting obligations between who caused the damage. He said: 'If one of our drivers put a small dent in a door, Siemens would be sent a fee, but the rental company won't repair the dent there and then. Then when a different customer has the vehicle and puts another dent in the door they'll be charged a fee too. 'When the rental car comes to the end of its time on the rental fleet, let's say six months, it will then be repaired before the vehicle is de-fleeted. The cumulative damage is then banked up pro-rata.'
He also recognised that many within the industry regard this method as too complicated to administrate. Rental companies would rather avoid repairing cars as damage occurs if the damage is small enough that it won't affect the vehicle's operation. This reduces downtime and allows companies to extend the asset's lifespan during its window of operation.
Jason Moseley, director at the National Body Repair Association (NBRA), indicated that the investigation will highlight a growing problem of big corporations applying pressure to bodyshops to work with 'opaque practices and poor commercial terms'. Moseley said: 'Terms are agreed with bodyshops like labour rates, discounts on parts, discounts on paint and another 10% discount on everything they do. 'It's bargain basement for the bodyshop, the middle man gets a discount and the consumer doesn't get passed on the benefit of that discounted work. That's the main problem with this; the consumer isn't seeing what's happening behind these deals.'
The BVRLA has refused to comment on Moseley's remarks. Tate's advice to fleets was to ensure drivers inspect their rental vehicles carefully before using them. He said: 'Make sure you pick up on any damage and report it immediately with photo evidence and an image of the odometer to prove the car hasn't been driven. 'If you don't do this, as soon as you drive off in the car and miss any damage, you will be invoiced for it.'