New traffic decree to encourage violations
Car rental companies might face bankruptcy
KUWAIT: A recently issued decree that forces rental car offices to pay the fines on behalf of their clients and subsequently remove the ministry as a debt collector in between has raised havoc amongst rental companies. For some offices, the new decree might lead to bankruptcy. “The new decision of the Ministry of Interior is a disaster. We may close our business completely,” a disappointed owner of a car rental office in Salmiya told Kuwait Times.
The Ministry of Interior recently issued a decree forcing car rental offices to pay the socalled “indirect traffic fines” on behalf of customers who committed the violations with a vehicle rented from them. The decree is applicable to traffic fines committed in the period after July 1, 2013. Customers who committed a traffic violation before July 1 will be responsible to pay their own fine.
The Traffic Department argued that the implementation of this decision is important because they will no longer have to chase customers of rental offices for a violation committed with a car owned by a rental company. The new decree removes the ministry as a third party in collecting debts from the customer and the rental car office. According to ministry officials, this decree will ensure faster collection of government money.
According to Khalid Yousif, owner of a rental car office in Salmiya, collecting the money of the traffic fines committed by customers is a very complicated problem. “On average, only one customer from 10 who have committed a violation while renting our vehicles pays his fines,” explained Yousif, elaborating that his office receives about 200 fines per month. “Of these I have to pay about 90 percent. Most indirect fines are registered after three to six months, and during this period customers leave the country, others change their addresses, while many switch off their cell phones. This makes it difficult or impossible for us to collect the money from them. This decree is a disaster,” he pointed out.
New solution
“We paid about KD 5,000 in fines and only collected about KD 500. We have employed a debt collector for this reason only, yet we incur great losses and still pay great amounts of money on behalf of customers,” Yousif said, adding, “My office as well as other offices are facing the danger of closing due to this problem.” In a bid to solve the problem, Yousif suggested a solution. “You can block an amount from the credit card of the customer as a guarantee to deduct the amount after receiving the fine,” added Yousif.
Omar, director of another car rental office in Farwaniya, criticized this decree as well as the traffic fines registering system. “In the United Arab Emirates for instance, the rental offices do not face such problems in collecting traffic fines. This is due to the improved system used there, as the fines are registered immediately and the customer pays them on the spot. So the rental office does not have to bother with any fine collection. The recent ministry decree is paralyzing our work, and may lead to ending our business,” he stated.
Traffic jams
In the past fines were collected differently. “If we received the fine before the customer handed over the vehicle, the fine amount used to be added to his payment. While if it came later, then the office was able to transfer the fine from the office’s vehicle to the customer’s name,” he said. “No mistakes or cheating can happen in this operation as we have to provide the contract and copy of the customer’s civil ID, proving by date and time that he was using it at the time of committing the violation,” stressed Omar.
According to Hosni, an administrative staff in a car rental office in Sharq, this decree may be related to corruption. “This decision is not in favor of small offices. We won’t be able to survive. I heard as well from other colleagues from various offices that the traffic department is allowing the transferring of fines for certain offices only, which means there is wasta for some. Also, maybe this decision was issued to decrease the number of rental vehicles with the excuse of reducing traffic jams,” he said. The rental car clerk explained that customers will now be encouraged to be careless and not respect traffic rules. “Our office receives about 80 fines every month, which is about KD 3,000. To collect the fine later from the customer through the court is not feasible, as it will cost much more to file a case to collect KD 15 or KD 20 from a person, in addition to the long time it will take at the court,” Hosni added.