Rent-a-Car Companies Putting Recalled Autos on the Road

ABC News Investigation Finds Enterprise, Hertz and Avis Often Rent Vehicles Despite Safety Recalls

By JOSEPH RHEE and BRIAN ROSS

July 7, 2010—

The country’s biggest rent-a-car companies routinely rent out vehicles under safety recall before they have been fixed, an ABC News investigation has found.
Executives of the country’s largest car rental company, Enterprise – the parent of National and Alamo – made the surprising admission in a California court case involving the deaths of two California women.

"When demand called, we rented out recalled vehicles, it happened, I won’t lie," said Mark Matias, a former Enterprise area manager in San Francisco.

"If all you have are recalled vehicles on the lot, you rent them out. It was a given. The whole company did it. Enterprise’s corporate offices look the other way regarding this fact," Matias said in an affidavit filed for the case in August 2008.

Other Enterprise executives testified that there was no companywide policy requiring cars under recall to be held back from rental.

Neither Avis nor Hertz have such companywide policies either, according to their spokespeople. Both companies say they assess safety recalls on a case by case basis, and work closely with the car manufacturers to make sure repairs are done in a timely manner.

"Their policy is to gamble with the lives of their customers," said Clarence Ditlow, executive director of the Center for Auto Safety. "They want to keep the cars on the road making money, even though there are outstanding recalls on them."

The court case with Enterprise involved the deaths of two young California women who rented a Chrysler PT Cruiser in October 2004, one month after Enterprise received a recall notice that an underhood engine fire could result from a possible leak in the vehicle’s power steering flue.

Raechel Houck, 24, and her sister Jacquie, 20, died instantly after their car caught fire and hit an oncoming semi-tractor trailer on Highway 101 in northern California.

The sisters had rented the car to visit their parents in Ventura County, CA.

"You want them to drive something safe, so I sent them the money to go to Enterprise and get a rental car," recalled their father Chuck Houck.

During the court case, the Houck’s lawyers discovered that the Enterprise Santa Cruz branch had rented the PT Cruiser three other times since the recall notice.

"I had never imagined in a million years that a company could rent a car they knew was recalled," said the girls’ mother, Cally Houck.

$15 Million Judgement

During the discovery phase of the case, an Enterprise manager, Thomas Moulton, was asked, "Did you ever consider the possibility that Enterprise should not rent cars to the public after they’ve received recall notices from the manufacturer?"

"No," responded Moulton.

"Do you think it’s a good idea to do that, to rent cars that can catch fire, to the public?" he was asked.

"I have no idea," responded the Enterprise manager during the deposition.

The Houcks say that Enterprise lawyers tried to suggest that their daughter Raechel, the driver, was "suicidal or on drugs."

"They spent five years pounding these parents," said the Houck’s lawyer, Larry Grassini. "’Your daughter was negligent in the manner in which she drove the car, and she killed herself and her younger sister.’ And they continued to maintain that position until two weeks before the trial, at which time they finally admitted that they were the only cause of the deaths of Raechel and Jacquie," said Grassini.

The Houcks had earlier turned down a $3 million settlement offer that would have prevented them from talking about their case against Enterprise.

After Enterprise’s admission of negligence, an Alameda County jury awarded the family $15 million earlier this year.

Ditlow has asked the Federal Trade Commission to investigate Enterprise’s policy, which he says violates a 1991 ruling by the FTC involving a similar issue with Budget Rent-a-car.

"What we need to do is have the FTC step in and go against every single rental car company that has a policy of driving and renting unsafe vehicles subject to recalls," said Ditlow.

Enterprise says because there are so many auto safety recalls, it has to evaluate each one on a case by case basis.

The company says its executives are paying much greater attention to the recalls in the wake of the Houck case.

The company says it recently grounded and repaired 2010 Grand Cherokees because of passenger side airbag concerns. And this year, Enterprise says, it grounded more than 35,000 Toyotas and Pontiac Vibes because of potentially sticky accelerator pedals.

"Given all we have learned, today we would ground the recalled PT Cruiser until repaired," said Enterprise executive vice president Greg Stubblefield in a statement.

"We share the Houcks’ goal of preventing anything like this happening again," said Stubblefield. "We are truly sorry for their terrible loss."

CLICK HERE TO READ THE FULL STATEMENT FROM ENTERPRISE.

"They killed our daughters on October 7, 2004," said the Houcks in a statement. "This is the first time we heard them say this. All we ask now is that Enterprise stop renting recalled vehicles so this nightmare is not suffered by any other parents."