Feds Fine Zipcar for Renting Out Unrepaired Recalled Cars

The NHTSA says Zipcar has improved its procedures since the government’s investigation.

byLewin Day|
Feds Fine Zipcar for Renting Out Unrepaired Recalled Cars
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After a long investigation by the National Highway Traffic Safety Administration (NHTSA), car-sharing giant Zipcar was found to have rented out vehicles that hadn't undergone required recall repairs. The revelation raises questions about rental vehicle safety protocols and has netted the company a sizable fine in the process.

As covered by Reuters, the $150,000 penalty was issued after a lengthy investigation that spanned over five years. Beyond the initial fine, if Zipcar falls short in adhering to settlement terms reached with the NHTSA, the company might be looking at a further $150,000 penalty. Zipcar, which became a part of the Avis Budget Group in 2013, must provide an audit report listing all vehicles with pending recall repairs. This report should be submitted within 150 days from the settlement's effective date.

Zipcar fell afoul of a 2015 law that requires rental car companies with fleets of 35 vehicles or more to ensure that any recall repairs are completed prior to renting them out. The law was geared to ensure that rented vehicles meet appropriate safety standards.

Zipcar stated on Monday that the crux of the settlement revolved around a 2017 recall. According to the company, during that time less than 50 out of 12,000 vehicles were found in violation of the law. The company noted that this was a "unique mileage-based recall that did not require the immediate grounding of the vehicles," and stated that the affected cars are no longer part of Zipcar's fleet. The company was not specific as to the vehicles concerned.

Ann Carlson, acting administrator for the NHTSA, was less than conciliatory on the matter. "Vehicles with open, unrepaired recalls pose a safety risk to everyone on the road," said Carlson, adding "We will continue to utilize all our enforcement tools to safeguard the public from defective personal or rented vehicles."

As part of the resolution, the settlement agreement has a duration of one year, though there is potential for an extension at the NHTSA's discretion. Since the investigation's initiation, Zipcar has made significant strides according to the federal regulator. Thanks in part to an automated documentation system for recalled vehicles, the company has been credited for its improved handling of recall procedures.

Zipcar isn't the only rental operator to come under the NHTSA's watchful eye. Last December, the NHTSA announced an investigation into Hertz, probing if the company rented out cars with unaddressed recalls. At the time, the rental giant, which also has the Dollar, and Thrifty rental brands under its umbrella, reiterated its commitment to offering safe rental vehicles.

While it's positive that the NHTSA is keeping an eye on the auto rental market, the fine should be put in perspective. Zipcar itself has reported annual revenues in the hundreds of millions of dollars, with its parent company posting figures in the billions. A meager six-figure fine is far from a threatening enforcement action to such a company. In any case, here's hoping Zipcar is now doing a better job of keeping recalled vehicles off the roads.

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