A loophole in federal law allows rental car companies to rent or sell vehicles that are under a safety recall, without fixing them first. Enterprise is the largest rental car company in the nation but admitted in a letter to the National Highway Traffic Safety Administrationm, that it continues to rent vehicles to the public, even after receiving notice they are under a safety recall.
Pending legislation, S 1445, sponsored by Sen.Schumer, Sen Boxer and others, would ground defective rental cars that are subject to a safety recall, until they are fixed. Enterprise is attempting to defeat the bill.
Senator Shumer proposed the legislation after sisters Raechel and Jacqueline Houck of Santa Cruz, CA were killed in 2004 when the Enterprise rental car they drove caught fire under the hood, they lost steering and veered across the median crashing head-on into a semi-trailer truck. Their car exploded on impact, killing them both. Enterprise received a safety recall notice from the manufacturer 30 days before the fatal crash but continued to rent the car to unsuspecting customers.
Consumers Council of Missouri urges concerned citizens to write to Andrew Taylor, CEO of Enterprise, urging him to drop opposition to S 1445. His address is: Andrew Taylor, Enterprise Corporate Office, 600 Corporate Park Drive, St. Louis, MO 63105.
NEWS for immediate release: Tuesday, February 21, 2012
Judi Roman, Consumer Council of Missouri (St. Louis, MO) 314-647-7723
Rosemary Shahan, President CARS (Sacramento, CA) 530-759-9440
Enterprise Tries to Kill Rental Car Safety Bill Advocated by Rival Hertz and Consumer Groups
Enterprise Rental Car Co. is attempting to defeat federal auto safety legislation, despite a historic new compromise agreement struck between a rival rental car company Hertz and a non-profit auto safety organization. Hertz has agreed to support a federal requirement for rental car companies to ground defective rental cars that are subject to a safety recall, until they are fixed.
A major investigative report published today by USA Today, the nation’s largest-circulation daily newspaper, announced Hertz’ stand — unprecedented for a rental car company.
The agreement reached by Hertz and Consumers for Auto Reliability and Safety (CARS) is similar to legislation proposed by Senator Chuck Schumer (D-NY) and championed by Sen. Barbara Boxer (D-CA) that is pending in Congress. Thanks to Hertz’ decision to side with consumers, passage is now more likely, when Congress reconvenes. Under existing law, new car dealers are prohibited from selling recalled vehicles once they receive notice about a safety recall, until they are fixed. Auto manufacturers are required by law to pay for the repairs. However, a loophole in the law allows rental car companies to rent recalled vehicles to the public, without fixing the safety defects first.
Sen. Schumer named the proposed legislation in memory of sisters Raechel and Jacqueline Houck of Santa Cruz, CA, who were killed in 2004, at ages 24 and 20, when the Enterprise rental car their father arranged for them to rent, a PT Cruiser, caught fire under the hood. The car also lost its steering, veered across the median, and crashed head-on into a semi-trailer truck. The car exploded on impact, killing both sisters.
Enterprise received a safety recall notice from Chrysler about 30 days before the fatal crash, warning about a defective steering component that was prone to leaking, causing a risk of under-hood fires and a loss of steering control. But the company continued to rent the car to unsuspecting customers, including three other people before the Houck sisters. The sisters were led to believe they were getting an upgrade. In fact, the PT Cruiser was the last car on the lot. Later, their grieving parents happened to find out about the safety recall from a mechanic who worked with Mr. Houck at an auto dealership.
When the Houcks sued Enterprise, the company fought back, insisting that the young women must have been suicidal. It wasn’t until after five years of litigation that Enterprise finally admitted 100 percent liability — about two weeks before the case went to trial. This meant the jury never heard key evidence, including a statement from a former Enterprise manager that, “When demand called, we rented out recalled vehicles … 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.”
The jury awarded the Houcks $15 million — peanuts to the largest rental car company in the nation. Despite pressure from Enterprise, the Houcks refused to sign a confidentiality agreement, leaving them free to push for legislation to spare other families the same terrible loss.
Despite the Houcks’ tragedy, Enterprise has admitted to federal regulators that it continues to rent vehicles to the public after they are recalled by the manufacturer due to safety defects, without fixing them first. According to Enterprise, “A committee of senior executives of the parent company, including the executives responsible for vehicle maintenance and repair, evaluates recall notices. If the committee is confident that we can continue to safely rent the vehicle, we may rent the vehicle prior to the recall work being completed.”
Enterprise boasts that last year it took in over $14 billion. So it’s hard to believe they can’t afford to repair unsafe, recalled vehicles before renting them to the public,” said Rosemary Shahan, President of Consumers for Auto Reliability and Safety (CARS), a non-profit auto safety and consumer advocacy organization based in Sacramento, CA. “Particularly when Hertz is supporting the legislation, there’s no excuse for Enterprise to keep putting its customers at risk.” CARS negotiated the agreement with Hertz to support grounding the recalled cars.
“If this law had been in effect in 2004, my daughters would still be alive,” said Carol “Cally” Houck, Raechel and Jacqueline’s mother. “No one else should have to lose a child because the rental car company doesn’t care enough about their safety to ground a car they know is so unsafe it is being recalled.”
Enterprise also admitted that it ordered tens of thousands Impalas from General Motors that were missing standard side air bags. By cutting corners on safety, they shaved approximately $145 off the price of each car. Side air bags have been proven to dramatically reduce the risk of serious injuries or fatalities from side impact collisions. Enterprise then resold the vehicles as used cars, claiming they had side air bags. In order to settle a class action brought on behalf of used car buyers who purchased the cars, Enterprise offered to give the owners a $200 discount.
“I hope Enterprise will put its customers’ safety first, by throwing its full support behind the legislation advocated by Senators Schumer and Boxer,” said Joan Bray, chair of the Consumers Council of Missouri. “Enterprise is a key member of Missouri’s corporate community and we expect it to behave in a responsible and ethical manner.”
 Statement of Mark Matias, former Enterprise manager, 2008.
 Letter from Enterprise Holdings to Jennifer Timian, Esq., Chief, Recall Management Division, Office of Defects Investigation, National Highway Traffic Safety Administration, April 7, 2011, Page 2.