A couple of months ago, I wrote about how Hertz is rolling out new AI technology to detect vehicle damage. The idea is that Hertz is installing a bunch of cameras when cars are picked up and returned, which will instantly spot any damage, and then bill renters for it.
In theory, there’s nothing wrong with this — it’s a more accurate system than the previous manual inspection used for determining the condition of vehicles. As you’d expect, though, Hertz is investing in this technology not to make the rental experience more pleasant, but instead, to make it way worse.
Hertz is screwing over customers with new AI technology
The Drive has the story of a firsthand experience that someone had with Hertz’s new AI damage system. Specifically, this involved a Volkswagen rental at Hertz’s location at Atlanta Airport (ATL), which was also the first location in the country to have this new technology.
He returned the car with a one-inch scuff on the driver’s side rear wheel. He was alerted to the damage minutes after dropping off the vehicle, with a picture of the damage, plus a bill for $440.
That includes a $250 fee for the repair, a $125 processing fee, and another $65 administrative fee. This was all revealed digitally, with not much transparency about what the processing or administrative fees are. Hertz defines a processing fee as “the cost to detect and estimate the damage that occurred during your rental,” while Hertz claims the administrative fee “covers a portion of the costs as a result of processing your claim.
This is where it gets even scammier. Hertz offered a $52 discount if the renter agreed to the terms and paid within two days, and offered a $32.50 discount if he paid within a week.
When he tried to inquire about the charge, the chatbot system used for handling claims doesn’t include any human agents. However, it can flag a claim, so that an agent can review it later. The issue here is obvious — the discount only applies if you pay almost immediately, and it can take days for someone to reach out to you.
In response to an inquiry about this practice, a Hertz spokesperson said the following:
“The vast majority of rentals are incident-free. When damage does occur, our goal is to enhance the rental experience by bringing greater transparency, precision, and speed to the process. Digital vehicle inspections help deliver on that with clear, detailed documentation that is delivered more quickly, as well as a more technology-enabled resolution process.”
Hertz also refused to state whether the processing fee and administrative fee are higher for locations using this technology. It almost seems like Hertz is billing people for the technology that causes them to get charged for damage.
This makes me less likely to rent from Hertz
Even though Hertz is supposed to be a “premium” rental car agency, it doesn’t exactly have a great reputation. I mean, the company was forced to pay $168 million for having its customers arrested, which should tell you everything you need to know.
As I said, in theory there’s nothing wrong with using technology to detect damage. I actually appreciate the greater transparency. The issue, as I see it, is threefold:
- There’s no transparency as to how Hertz determines the cost of a repair; it seems that completely replacing a Volkswagen wheel typically costs less than what Hertz is trying to charge here for a tiny scuff
- Beyond the lack of transparency about the cost of the repair, the processing fee and administrative fee are absolutely ridiculous
- The lack of being able to instantly get in touch with a human is problematic
Let’s be honest — we all know that Hertz isn’t going to take this car out of service and repair it based on a tiny scratch on a wheel. Quite to the contrary, the company will probably wait until a car has a lot of serious damage, before fixing it, and the cost of those repairs will likely be nowhere close to what the company is trying to charge.
These developments make me less likely to rent from Hertz, because I feel like rentals will get costly pretty quickly. I like bringing back my rental, having someone inspect it, and then knowing that I can walk off without being worried that I’ll get an extra bill.
Obviously Hertz won’t share this data, but I’d be fascinated to know what kind of an increase we’re seeing in damage with this new system, and how much that’s contributing to the company’s bottom line. To what extent will customers vote with their wallets, though?
I can’t imagine that the underwriters of credit card rental car coverage are happy about this, as it’ll surely cause a big increase in claims over time.
Bottom line
Hertz is rolling out AI vehicle damage detection, and as renters, it’s something we should dread. The issue isn’t that technology is being used to transparently determine damage. That’s fair.
The issue is the lack of transparency when it comes to the cost of vehicle repairs, plus the processing and administrative fees. This is a massive money grab, and is a reason to think twice before renting from Hertz.
What do you make of Hertz’s new system for damage detection?
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