BUSINESS

Cally Houck Pushes Rental Agencies To Stop Leasing Out Unsafe, Recalled Cars

06/20/2012 10:26 am ET | Updated Jun 20, 2012

Lawyer Cally Houck might never give up her workspace, a law office she has rented in Ojai, Calif., for some 30 years.

She would like to retire but this is the last place she saw her two daughters before a fiery crash on Oct. 7, 2004, as their rental car smashed head on with an 18-wheeler. The accident that claimed their lives has inspired Houck to advocate for a federal law ensuring that a recalled car must be fixed before a rental company leases it out to customers.

Houck has enlisted the support of Sen. Barbara Boxer (D-Calif.), who, along with Rep. Lois Capps of California, plans to introduce legislation on rental car safety in a few weeks.

Eight years ago, her daughters had been citizens of the world, Houck told The Huffington Post. Raechel, then 24, had just returned from Italy to Santa Cruz, Calif., where she was sharing an apartment with her sister Jacqueline, then 20.

Raechel's two-year stay in Italy -- where the locals had saluted her, "Ciao, Veronica!" by her middle name -- had prompted her to apply to the Italian Cultural Institute of San Francisco, where she hoped to train to become a translator. Jackie was an artist and an equestrian.

The two sisters' road trip to Ojai granted them a visit with their mother and friends; plus Raechel had a fitting for a bridesmaid dress. At the end of a lovely week, the two best friends and one adoring mother stood hugging goodbye outside Houck's law office.

A couple of hours later, Raechel and Jacqueline died in the crash. At first local newspapers reported that officials found it hard to determine its cause because the car had been so badly burned. They speculated that Raechel had lost control of the car.

It took days before Houck learned that the Chrysler PT Cruiser that her daughters had rented -- which had been offered to them as a free upgrade -- had been recalled because the power steering fluid could leak, which could cause a fire. A leak of power steering fluid could also result in a loss of car control.

But the rental car company, Enterprise Rental Cars, never made repairs to that PT Cruiser after the recall. The Houck sisters were the fourth customers to rent the PT Cruiser after Enterprise learned of the recall.

Enterprise Rental Cars has since admitted it was at fault for leasing out the car and paid the family $15 million in damages.

Houck wants rental car companies to promise they won't rent or sell a vehicle until any safety recall issue is addressed. So far, only one rental car company -- Hertz Rental -- has promised to permanently stop the practice. Other companies have said they are on board, but won't promise to never rent a recalled vehicle and not fixed.

"It's so simple, so simple," Houck said. The rental companies "just don't want to be told what to do." Houck has found a ally in the Senate in Boxer, who is planning to introduce a billsimilar to one proposed last year by Sen. Chuck Schumer.

On May 7, Boxer gave the major car rental companies 30 days to sign a pledge saying they would stop renting recalled vehicles. She announced last week that only Hertz made that commitment.

The chief executive of Enterprise, which also owns National and Alamo, wrote Boxer that he agrees with her plan. In a May 22 letter, Enterprise CEO Andrew Taylor stated that his company has already stopped renting recalled cars, noting, "We are happy to comply with the pledge set forth in your letter." But with additional conditions outlined in his letter, Taylor fell short of saying Enterprise would make this change permanently, which has been a sticking point with Boxer and Houck. In short, Taylor did not sign the pledge.

Rental companies can be slow to fix recalled vehicles, according to recent National Highway Traffic Safety Administration testimony. Chrysler and General Motors told the NHTSA last year that 30 days after a recall, just 10 percent to 30 percent of recalled rental cars had been fixed. Within a year, the repair rate rose to only 50 percent. Chrysler declined to comment for this story.

NHTSA is monitoring the issue but has said it doesn't have the legal authority to force individual consumers and rental car companies, to make needed repairs.

And it's not that rental car companies are struggling financially: The industry took in $22.4 billion in revenue in 2011, according to Auto Rental News.

Car recalls can be more complicated than other product recalls. When an over-the-counter medication is recalled, consumers are encouraged to throw out the offending bottles. When spinach is recalled, supermarkets will clear it from their shelves.

But when cars are recalled, the process is slower and more involved. First, the National Highway Traffic Safety Administration posts on its website a notice, which will usually be picked up by media organizations. Several weeks later, the automakers send out letters to dealers, rental car companies and other large fleet managers to let them know which cars have been recalled. Then letters are sent to individual owners.

Sometimes carmakers send out notifications before they know how to solve the problem at hand. This was the case when Toyota issued massive recalls of vehicles in 2009 and 2010 because of sudden acceleration concerns. The company first blamed the problem on the floor mats' sticking under the pedal; Toyota suggested that consumers remove the mats. But the carmaker continued to research the matter and eventually issued a second recall for gas pedals, which needed replacement.

Other recalls can result in a consumer being confused whether his or her car in particular is subject to a publicized recall. Automakers often change parts suppliers midstream, so while one car containing a piece from Company X might be recalled, a neighbor's car of the same model might include Company Y's part and not require a recall. An automaker might take a while figure out which vehicles contain the problematic parts.

Further complicating matters is the fact that not all recalls are the same. Some recalls are true safety issues that could result in an accident or an injury; others pose less of a risk.

This month, Toyota recalled some of its 2013 Scion FR-S models because of inaccuracies in the owner's manual.

That type of minor recall should not keep rental cars off the road, Taylor wrote in his letter, adding that Enterprise will still ground its cars until all parties can agree on the proposed legislation. And he stressed that Enterprise's practices will keep unsafe cars out of consumer's hands. "Our vehicles are safe, meet all federal safety standards and are well maintained," he wrote. "No one need have any concern about the safety of the vehicles we rent."

But Houck isn't convinced about Taylor's promise and looks to legislation to resolve the situation so that no that consumer should ever worry about whether a rental car is safe.

"I'm doing this for my daughters and for consumers, and for myself, too," she said. "It helps to have a purpose, and I guess to maybe redeem the loss a little bit. Not that that can really ever help."

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