Federal legislation addresses rental car companies and auto recalls

8249948_sCurrently, rental car companies in Nevada and throughout the rest of the U.S. are legally able to rent out vehicles in their fleet that have been subject to a recall notice that is sent from the manufacturer and approved by the National Highway Transportation Safety Administration. However, current laws prohibit companies from selling or leasing the same vehicles. A bill has recently been proposed in the U.S. Senate that would close the loophole to include defective rental cars in an effort to remove unsafe vehicles from the roadways.

The bill’s origins

S. 921, the Rachel and Jacqueline Houck Safe Rental Car Act of 2013, was named for two sisters who rented a car in 2004 to travel home to visit their parents. They were unaware that their rental car had been recalled 30 days prior to their trip for a power steering hose defect that had the potential to start a fire. After the sisters’ car caught fire they were killed instantly when the vehicle slammed into an oncoming semi. Their mother, Cally Houck, has been seeking legislative support for the bill ever since the crash. Their rental car company eventually admitted their negligent actions and the Houck family was awarded $15 million for the loss of their loved ones.

How the Safe Rental Car Act would work

Under the provisions of the bill, auto dealers and rental car companies that rent vehicles or provide temporary loaners would be forced to ground any recalled vehicle within 24 hours of receiving a recall notice to prevent a fatal crash from occurring. If a company has a fleet of 5,000 or more affected vehicles, they would be allowed 48 hours to comply with the law. If the recall allows for temporary measures that the company can take to remove the safety risk until the proper repairs can be made, rental companies would be able to make the temporary fix and continue to rent the car.

The NHTSA would be in charge of investigating and policing how rental car companies handle the recalls and ensuring that compliance is met through reporting requirements. However, most of the major rental car companies already voluntarily adhere to most of the provisions of the bill and have stated that they support the legislation. Since compliance is predicted to be so high, the Congressional Budget Office estimates that implementation of S. 921 would cost $2 million over 2014-2018.

A significant issue 

A survey commissioned by the NHTSA found that rental car companies have rented tens of thousands of unrepaired recalled vehicles to unsuspecting drivers since 2006. The survey asked rental car companies to provide researchers with their recall repair information. The study found that the best performing company only had a 65 percent repair rate on recalled vehicles after 90 days from the time they received the recall notice. The worst performer only repaired 34 percent in the same time period.