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

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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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  • Stories like this occur in situations where there is no independent check on such things as how much a company is paying for a new car. If we have to take ‘their’ word for it, the choice of words is up to them.

  • pmcw

    Every time I rent a car I take the time to do a close inspection. During that inspection I take pictures of even the slightest scuffs and dings. The agents often say I’m not responsible for anything smaller than say a quarter, but I document everything beyond the most minor paint chips just in case, and I have the agent list what I document on the contract.
    I had one problem recently with a car from Enterprise. On the way home one evening the temperature light came on and the display said to stop the car and keep the engine running so it could cool down. I did that, and called Enterprise while I waited. I also kept the agent on the line after the display said it was okay to drive – I was only about ten minutes away from the condo. I had to stop one more time in route, but again was given the all clear by the display.
    After arriving at the condo the agent said she would have the local Enterprise office deliver a new vehicle the next day, and pick up the one I had been driving. The next morning I inspected the vehicle, and sure enough there was a hole in the radiator. Upon closer inspection there was also a hole in the plastic shroud below the radiator, but there were no scuffs on the shroud, and it looked as though the hole was poked in a direct vertical line (could not have happened while the car was moving forward or back). I shared that information with the guy that picked up the car and told him I took pictures of the damage.
    Nothing was said when I returned the new car, but several months later I got a notice that I should contact my insurance company and contact Enterprise. I called Enterprise and asked why they waited several months to claim I damaged the car, and discussed the pictures that I still had. After a short review with a supervisor, Enterprise said they would waive the claim.
    I think the point here is documenting things with pictures is a good practice. In this case it was probably also helpful that I was a member of the Enterprise club and rent cars from Enterprise fairly frequently without incident. As Christopher frequently reminds his readers, being kind and polite also goes a long ways towards a favorable outcome.

  • Blamona

    as for a small scratch on a bumper, our Cadillac had 1 small one and cost $900 to repair, so BMW cost is not out of line, and trying to refuse to pay it is out of line! Elliot, I think you do an awesome job when someone is wronged, and please keep it up. My thing is I don’t think all people seeking your help are always wrong either. In the case of the stolen car, it was never said if he kept it locked or unlocked, according to the contract, and he waited a day to call police? So didn’t totally add up (unless we didn’t get all the info but you did) While insurance covers depreciated value, a business still has to buy a new car to conduct business. I feel terrible for these people, but it’s the contract they signed!

  • AirlineEmployee

    Yes, regulate. The government wants to regulate airline seat size and other “auxiliary” charges by the airlines – they need to start looking at rental car companies and their nonsense as well.

  • Blamona, the problem is that the IRS only allows you to take the depreciated value on a loss…the same should apply here.

    Try getting new car costs in court and you will be laughed out the door.

  • Fishplate

    I think it’s unfair to use the $22,000 Taurus as an example without providing some facts, or at least giving us Budget’s side of the story.

    Yes, a used Taurus can be had for $18,000, and even much less than that. But how does your sample car compare to the one that Budget actually owned prior to it’s being stolen?