Inquiry into ‘£30m car hire repair rip-off ’
THE car hire industry is facing investigation over alleged “fraudulent” repair costs after Europcar disclosed that consumers were suspected of having been overcharged by at least £30million.
Europcar, one of the world’s biggest car hire companies, is accused of systematically overbilling more than half a million customers for repairs over many years, in what could become one of the biggest consumer overcharging scandals in recent history. The Serious Fraud Office is preparing to begin a criminal inquiry into Europcar in the wake of a Daily Telegraph investigation into potentially fraudulent charges for repairs, which were inflated by up to 300pc.
In light of the allegations, repair firms and consumer watchdog Which? are today calling for a wider investigation by the Government and authorities to establish if other car hire firms might be profiting from illegal charging tactics.
The National Body Repair Association, which represents repair firms, has suggested grossly inflated margins for vehicle repairs are widespread, warning of “an increasing trend towards large corporates pressurising small firms to work with opaque practices and poor commercial terms”.
Alex Neill, from Which?, said: “If Europcar is found to have inflated costs for repairs, people will be outraged. There should be an immediate investigation to ensure others aren’t doing this and customers who have been left out of pocket are compensated without delay.”
Evidence seen by this newspaper suggests that well over half a million Europcar customers were overcharged
over the course of a decade as a result of secret, pre-agreed deals between the firm and its suppliers, which directly financially benefited Europcar at the expense of the customer.
A Europcar spokesman said that even on the basis of its own preliminary review, “the implications of the investigation will be somewhere in the region of £30million”. However, the final figure could be significantly higher.
Europcar also faces being taken to court by consumers seeking redress and could be fined as much as 10pc of its annual turnover if it is found guilty.
Due to the huge scale of the alleged wrongdoing, it is understood that Trading Standards, which has been investigating the firm, has now suggested that the SFO should take over. The SFO met with Europcar last week to discuss the case, it can be disclosed.
Meanwhile, it has emerged that taxpayers have been caught up in the scandal as the Ministry of Defence and Network Rail are among Europcar UK’S biggest clients.
The MOD has a contract with the car giant which is worth more than £10m a year for staff vehicles, including adapted cars used by special forces. Network Rail’s contract, also for staff vehicles, is worth about £2m. But in light of the allegations against Europcar, speculation is growing over whether the deals will be discontinued to protect taxpayers from a potential rip-off.
Network Rail insisted it had measures in place to ensure it never paid “above market value” for repairs.
The alleged fraud, which was first exposed by this newspaper last month, has echoes of the PPI mis-selling scandal in which mortgage and banking customers were sold policies with grossly inflated hidden commissions. So far, in what has been dubbed “the biggest financial mis-selling scandal of all time”, banks have paid £25billion in PPI compensation to millions of people.
In an indication that Europcar’s alleged rip-off could reach wider than the UK, it has emerged that last year Europcar’s Australian arm received a court order to pay $100,000 for making false or misleading representations about consumers’ liability in the event of vehicle damage.
Europcar operates in 140 countries worldwide and takes revenue of nearly €2billion (£1.75 billion) a year.