What to do about “blank check” syndrome (there oughta be a law!)

By | March 19th, 2016

It’s time to confront one of the most glaring double standards in business: you pay the maximum, they pay the minimum.

Nowhere is it more apparent than in the Jay Corporan case, which drew hundreds of comments and a click or two from you, dear readers.

You’ll probably recall the details, but here’s a reminder: Budget ordered Corporan to buy it a new car after his 2015 Ford Taurus rental was stolen and taken for a joyride.

Total price: $22,000.

But wait. A used 2015 Taurus can be had for as little as $18,000. Why are they charging Corporan so much? (And while we’re on the topic, why are they charging him anything at all? He was a victim of a crime. Doesn’t Budget have insurance for that kind of thing?)

This a frequently discussed topic on our site. They charge you the maximum, but they pay the minimum.

Whether you’re dealing with an insurance company, a wireless carrier or an airline, you can bet that if they have to pay some kind of claim, they’ll shell out the least they can. It’s not their fault; it’s part of their corporate DNA. It’s all about enhancing shareholder value by keeping costs down. They’re doing exactly what they’re supposed to.

But is it the right thing?

I remember Sixt’s recent case against Nicholas MacIlvaine. It charged him the most it could — 500 euros — before his insurance company was likely to get involved.

His crime? He allegedly put a few “scuffs on the bumper” of a BMW 3 Series rental.

“I dispute that I caused the scuffs and that 500 euros is a reasonable damage claim for a scuffed bumper,” said MacIlvaine.

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Sixt promptly forwarded the claim to a collection agency. What followed was a series of tense exchanges in which he refused to pay, and Sixt’s collections agency threatened to take him to court.

Unfortunately, my efforts to mediate his case were unsuccessful.

This happens time and again. When it comes to estimating what a company has to pay, it gets rounded down; when it comes to estimating what you have to pay, it gets rounded up.

Somewhere, on a subconscious level, do companies really believe they can demand a blank check from their customers? Is corporate America suffering from something like “blank check” syndrome?

It’s a basic assumption that’s rarely challenged: Companies sincerely believe they can name their own price. Businesses behave as if it’s their right, and customers almost always obey them. Maybe that needs to stop.

Car rental companies are among the worst “blank check” culprits. If one of their cars is damaged, they’ll send you a repair bill littered with “loss of use” and “administrative charges,” and little or no documentation for the repair. Just trust us, they say.

Car rental companies also insist that the blank checks they’re demanding from you aren’t a profit center. They are just covering their costs. But if that’s true, why can’t they document the actual expenses? Show us the repair bill, the reservation that couldn’t be honored, the invoice for “administrative” charges. They can’t because their expenses are almost certainly not that high.

No surprise that so many readers wanted to comment on the Corporan case. This isn’t about one unlucky renter; it’s about all of us.

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Corporate America asks us to write blank checks. Should we just let them?

Should billing by companies for damages, incidentals or other fees be more closely regulated by the government?

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