Europcar rental terms declared unfair


Posted By on 3/05/16 at 11:35 AM

The ACCC certainly wasn’t kidding when it said that it would take a good hard look at the car rental industry.

You may have heard that Hertz recently gave the ACCC court enforceable undertakings in relation to its damage assessment processes (see our blog on the Hertz case). Hot on the heels of the Hertz case, the ACCC took Europcar to task over false and misleading representations regarding consumers’ liability for vehicle accident damage, and unfair terms in Europcar’s 2013 standard rental agreement.

Misleading representations

The ACCC alleged Europcar falsely represented on its website that liability for accident damage was limited to a Damage Liability Fee of $3,650, unless an ‘extra cover’ policy was purchased. However, the standard rental agreement said that even if an ‘extra cover’ policy was purchased, consumers would still be liable for overhead, underbody or water damage to a vehicle.

Unfair terms

The ACCC alleged that certain terms in Europcar’s 2013 standard rental agreement were unfair, in breach of the unfair contract terms regime under the Australian Consumer Law. The rental agreement included terms that stated consumers would be liable for loss of or damage to the vehicle regardless of who was at fault, and that consumers would be liable for all damage to a vehicle, including minor dints and scratches.

The outcome

The Court:

  • fined Europcar $100,000 in relation to false and misleading representations about consumer’s liability in the event of vehicle damage; and
  • struck out terms in Europcar’s 2013 standard rental agreement that held consumers liable for all damage to a vehicle (no matter how minor), and regardless of whether the consumer was at fault.

ACCC Deputy Chair, Dr Michael Schaper, said “This decision is an important one, as it makes it clear to car rental companies that they cannot simply rely on contractual terms to hold consumers liable for any and all damage that may occur during a rental period, regardless of the circumstances. Terms in standard form rental agreements must be fair”.

Europcar was also ordered (by consent) to publish corrective advertising and pay the ACCC’s costs.

Both this and the Hertz probe should serve as a clarion call to the car rental industry to make sure its house is in order.

Extension to reach of unfair contract terms regime

The reach of the unfair contract terms regime will be extended effective November 2016 – if you are a small business or deal with small businesses, and you use standard form T&Cs, you must ensure they are compliant. You can read more about this here.

If you’ve not had your standard customer terms reviewed for a while, and are concerned that certain terms could be deemed unfair, please don’t hesitate to contact us.

Naomi Stephens Paralegal

Naomi is a paralegal in the Competition Law & Regulatory Compliance team, focusing on marketing activations, advertising review and trade promotions compliance.  She joined KHQ after having spent... Read More