The Australian Competition and Consumer Commission (ACCC) is taking CLA Trading Pty Ltd, which trades as vehicle hire franchise Europcar Australia, to court.

The allegations relate to the company’s vehicle rental contracts as well as a section on its website that includes information around the liability cover provided to car hire customers.

The ACCC alleges that 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.
• 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.

The ACCC is also alleging that Europcar engaged in misleading or deceptive conduct and made false or misleading representations on its website regarding the maximum amount that a customer would be liable for if there was loss or damage to the rental vehicle or third party loss.

These representations are seen to be misleading because in addition to the amounts specified, a customer would also be liable for loss or damage to an unlimited amount in some circumstances.

“Vehicle rental contracts are complex in nature and are often entered into during time-sensitive situations, such as airport departures. Consumers have little time to properly assess their rights and obligations under these rental agreements, and no opportunity to negotiate,” ACCC chairman Rod Sims said.

“The ACCC is concerned that Europcar’s standard consumer contracts contain terms that, if applied, impose unlimited liability on consumers in certain situations which the ACCC alleges is unfair.”

The ACCC is seeking the following orders:

• Declarations that certain terms in Europcar’s rental contract are unfair and therefore void.
• Declarations, injunctions, pecuniary penalties, orders for the publication of corrective notices and compliance program orders.

This case is scheduled to be heard on 5 February 2015 in the Federal Court, Perth.

Europcar’s response:

“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.”