The National Highway Traffic Safety Administration (NHTSA) has launched an investigation into how rental car companies deal with manufacturer recalls. It is specifically looking into whether or not rental car companies are properly fixing vehicles that have been recalled before renting or selling them and whether those repairs are being done promptly. Currently, there is no law in place that requires rental agencies to perform recall repairs before renting vehicles to customers. But the head of one consumer advocacy group is hoping that changes.

As surprising as it is, but no law currently exists that specifically prevents such a practice, according to the president of the American Car Rental Association. However, Clarence Ditlow, executive director of the Center for Auto Safety (CAS) says that the Federal Trade Commission Act states that companies “shall not engage in unfair trade practices. And, not repairing a defective vehicle after it has been recalled, before renting it out, is an unfair trade practice, and is a violation of the act.”

The NHTSA probe will look at almost 3 million General Motors, Ford and Chrysler vehicles -- covering 29 different models, and spanning model years 2001 through 2010 -- that were sold to rental car companies, and were subsequently recalled. Why just the Detroit Three? The American carmakers are the top providers of vehicles to rental car companies.

Ditlow says he would like to see the investigation lead to a more detailed law that specifically addresses this practice.

Enterprise Rent-A-Car At Fault For Deaths

In a statement, NHTSA declared that “particularly in recent months, (NHTSA) has been informed of incidents involving allegations of personal injury and death claimed to have been caused by safety defects and failures to conform to minimum Federal Motor Vehicle Safety Standards (FMVSS) on rental car vehicles for which a safety recall to remedy the safety defect or noncompliance had allegedly not been performed prior to the rental car company's lease of the vehicle.”

In the statement, NHTSA also noted, “there is presently a petition before the Federal Trade Commission seeking to prohibit at least one rental car company from renting vehicles on which safety recall campaign remedies remain outstanding.”

That rental car company would be Enterprise Holdings, which is presently the largest provider of rental cars in North America, via its three car-rental brands: Alamo, Enterprise and National.

The FTC petition was filed in August by CAS and Consumers for Auto Reliability and Safety (CARS) after Enterprise admitted liability at the end of a five-year lawsuit that stemmed from the 2004 deaths of two young women in a car wreck. According to the petition, the women, Rachel and Jacqueline Houck, were killed in a collision that was indirectly caused by a defect in a Chrysler PT Cruiser that had been recalled.

That defect was not fixed before it was rented to the women by Enterprise, according to the petition, which said the PT Cruiser had been recalled due to a risk of under-hood fires. The women were not informed of the risk and while driving in California, the car caught fire, causing a loss of steering power that led to a head-on collision with a semi-trailer truck. The women were killed instantly, according to the document.

Further, the petition said that at least four individuals had rented the vehicle after Enterprise received a recall notice.

After five years of fighting the suit, Enterprise admitted liability, and the parents of the Houck women were awarded a damages-only verdict of $15 million.

Compliance Required By Rental Companies and Manufacturers

NHTSA stated that the purpose of the probe is to “investigate recall remedy completion by rental car companies on (the above-mentioned) safety recall campaigns. These campaigns were chosen due to their inclusion of vehicles used in the rental market. This information is expected to provide the agency an indication of how completely and how quickly rental car fleets, in general or individually, perform necessary recall-related repairs or other remedies on the vehicles owned and then leased for use on the roadways.”

Laura Bryant, spokesperson for Enterprise Holdings, said that the company is “willing to cooperate with the Federal Trade Commission and the National Highway Traffic Safety Administration in any inquiry they wish to make concerning our current practices. We are confident those practices and procedures are fully consistent with our commitment to provide customers vehicles that are safe to drive... In most cases, we place a ‘hold’ on recalled vehicles so they are not rented until the recall work is completed.”

Ditlow strongly supports the NHTSA investigation, “because we need to find out how widespread this practice is in the rental-car industry -- either not fixing the vehicles before they are rented, or not fixing them soon enough -- or selling recalled vehicles to consumers without fixing the defect or informing them of the recall.”

Ditlow said that CAS knows of two specific instances of the latter practice.

NHTSA and the auto safety groups are also concerned about how promptly the recall notices are sent to the car-rental companies. “We would like to see NHTSA require the automakers to do a direct and early notification of the defect to the car-rental companies -- instead of waiting for the general recall letter to go out to car owners,” said Ditlow. “If the NHTSA investigation concludes that this is a widespread problem, and it gets the attention of the public, and consumers are constantly going up to rental-car counters and saying, ‘Please check to see if there is an outstanding recall on this vehicle,’ then I think this practice would change.”

In a statement, Bob Barton, president of the American Car Rental Association, said that most recalls issued by manufacturers “do not require the owner of the vehicle (whether it be a rental company, leasing company or a private individual) to ground a vehicle and cease operation.”

Although the Association does not maintain an industry standard, Barton explained, each car-rental company follows its own pre-established operating guidelines. He said that in most cases, the rental-car companies do not rent the vehicle until the recall work is completed, and that the practices of many companies “exceed what is required.”