Is an Auckland car rental company profiting from 'fake' insurance?

But on a recent trip, the Southlander needed a rental car for longer - four days - so she could tack on a weekend getaway to Rotorua with her husband.

Online, she found several expensive options. A lack of vehicles, shipping costs and delays on getting parts have led to Aotearoa having some of the highest car rental rates in the world. (You can read more about the problems in our article Rental car prices are soaring – will they ever come down?)

Using an aggregator site, Ashwell found one company seemed to be undercutting all their competitors: autoUnion. Located just a short distance from Auckland Airport, the Māngere business offers “quality vehicles" with "no hidden fees or costs".

It was the cheap rates that hooked Ashwell: she received a quote of just $188 to use a Toyota Aqua Hybrid for four days. "They offer lower prices," said Ashwell. "That's what's bringing people in."

But Ashwell said that was the only positive thing about her experience with autoUnion.

Is autoUnion's insurance real?

When Ashwell's plane landed, a minivan arrived to pick her up and take her to autoUnion's Montgomerie Road premise. There, she joined a lengthy queue of people also attempting to take advantage of the company's cheap car hire rates.

Waiting in line, she overheard each customer being asked to pay $3,000 as a bond to cover the insurance excess, in the event of an accident. "They weren’t taking no for an answer," Ashwell recalled.

Ashwell found this odd as she’d already paid for insurance when she booked the car. "After watching every person in front of me go through this, I refused to take the $3,000 basic cover option and took the $25-per-day standard cover option," she said. This meant a $500 bond was deducted from her debit card to cover her $500 insurance excess.

Despite requesting one, she didn't receive a policy document from autoUnion. When asked, they wouldn't tell her the name of their insurance provider. A sign advertising their insurance rates propped on the front desk also didn’t name the provider.

After 2½ hours working through her car rental with autoUnion, Ashwell placed her bags in the car, took some photos of its exterior, then jumped in. "It was filthy, and it smelled," she said. “It was pretty shabby. The car was not kept up [to standard]."

Unfortunately, those weren’t the only problems with the car.

A breakdown – and an accusation

Over the Thursday and Friday, Ashwell and her husband used the car without issue. They drove around the city, went out for dinner and kept it parked near their inner-city apartment.

On Saturday, the pair headed off early for a round trip to Ōhope Beach and then Rotorua, stopping at a petrol station on the way out of Auckland to fill up. They purchased 10 litres of ’91, as the sticker on the petrol cap instructed.

Later that day, as they were on the motorway returning to Tāmaki Makaurau, the car began juddering. “We made it to Fort Street, and we knew the car was going to die,” Ashwell said. They parked up, called autoUnion’s afterhours helpline, and were told to wait for a replacement car.

When a staff member arrived, he told them they’d used the wrong fuel. Ashwell, who has the same make of car at home, denies this, and has the receipt to prove it. “We didn’t put the wrong fuel in. We have the same make car at home. We know that it’s not the issue.”

The staff member wouldn’t be swayed, filming the shaking car as alleged evidence. He left them with the replacement car. When his attempt to drive the faulty car back to Māngere failed, Ashwell called a tow truck using her own AA roadside assistance service.

A few days later, when she was back home, Ashwell noticed a charge of $1,500 had been made to her debit card. The payment was made to autoUnion Abu Dhabii. The fees for the overseas transaction took the total to $1,558.

The mystery charge

Ashwell emailed autoUnion to ask why the charge had been made. She was told to talk with their accounts department to sort it out. When she did, they sent her a photo of a bottle “half filled with coloured liquid” that supposedly showed the incorrect fuel she’d allegedly put in the car, resulting in the damage she was now being charged for.

Ashwell continued to dispute this, and requested the results of the testing, the invoice for the work done to repair the damage and the breakdown and workshop details, all to no avail. Eventually, she received what she believes to be a fake invoice for work that had been done to the car. Her arguments with autoUnion escalated to the point where she lodged a claim with the Disputes Tribunal.

In the meantime, she supplied her bank with all the evidence she had to request a chargeback – a reversal for undelivered services - for the $1,500 payment. Her bank agreed and refunded the money.

Ashwell’s come to the conclusion autoUnion is offering “fake” insurance, then finding any reason it can to hold onto the customer’s bond or charge them for damage they didn’t cause. “I don't actually believe they are insured or offer insurance,” said Ashwell. She believes it’s “a money-making scam on the side”.

autoUnion’s response

After being sent a lengthy list of queries, a spokesperson for autoUnion responded, saying it was a budget rental service that offered cheaper rates to those looking to save money while travelling. "We are a tier-three budget rental car company, mainly targeting backpackers or customers who want the cheapest car rental and don't mind an older car with higher mileage on it," they said.

They admitted a "handful" of those customers were confused by the company’s insurance policies – especially if they'd already paid for insurance when booking through a third-party company which, the spokesperson said, would essentially be worthless. "When the renter arrives at our office wanting to pick up the car, they are given excess/bond reduction options: NZ$3,000 excess (free), NZ$500 excess (NZ$25 a day) and NZ$0 excess (NZ$35 a day)," they said.

Some customers, the spokesperson said, “think they have no choice but to take coverage twice." Like the sign on their desk, and as Ashwell experienced, the spokesperson didn't initially supply their insurance company’s name.

The spokesperson defended the condition of their cars, calling it "subjective". "All our cars get thoroughly groomed before being handed out," they said. "However, there are times when we don't get this done to satisfactory standards due to being busy or other unforeseen circumstances, but we always rectify our mistakes by cleaning it again, when a customer notifies us, and/or our rep points this out at the pick-up lane."

As for the $1,500 debit card charges, the spokesperson said this only happened in the case of damages or accidents – which, they claimed, were "under 1%" of cases. "Since our cars are older Japanese imports, we find it unfair to charge NZ$3,000 excess to the customer, knowing that the repair invoice would be much lower. For this reason, we charge half the excess at NZ$1,500 if it's windscreen damage or one panel damage."

AutoUnion appears to be a global chain of car rental services operating out of the United Arab Emirates, with two branches in Aotearoa (the second being in Christchurch). Its Facebook page says there are “more than 400 locations in Europe, Asia, Africa & America”. Emails to its head office and the person listed on its website, Ljubomir Dragicevic, went unanswered.

Consumer NZ visited autoUnion’s Māngere address and found a near-empty gravel park containing just three cars, one wrapped in a tarpaulin that had clearly been in a head-on collision. A small office was flanked by two portable toilets on one side and a broken-down van on the other. The van’s boot was propped open with a broom handle; with chairs and a table, it appeared to be functioning as a temporary staff room.

Beware autoUnion

Recent Google reviews for autoUnion’s Tāmaki Makaurau branch are dire, with many complaining of long wait times, dirty cars and claims for damage they weren’t responsible for. “The car appeared to be extremely old. No safety features, with questionable, flat tires,” wrote one customer, who complained of “unavoidable add-on insurance”.

Many complain of paying for insurance when booking a car online, then being asked to pay again when they arrive to pick up their car. “If you book via a third- party seller, the daily insurance option you pick WILL NOT matter at the front desk,” wrote one. “You will have to either put down a $3k bond or pick one of their $500 bond and additional daily hire plans.”

Facebook reviews are even worse. “Be very careful with this company,” warned one. “We were charged $1,500 for a scratch on the windscreen that was already there, but they insisted it was our fault … a perfect New Zealand trip ruined by these rotten Kiwis.”

Ben McFadgen, Rental Vehicle Association (RVA) chief executive officer, said he is aware of complaints about autoUnion dating back almost two years. He’s seen them offering cars for as low as $7 a day – well below current market rates. “You can't make money on $7 a day,” he said. “You just can’t.” (When Consumer requested a quote from autoUnion for a four-day trip through the Discover Cars website, we were quoted $190 – about $47.50 a day.)

The company isn’t a member of the RVA, said McFadgen, as the association has strict policies about which car rental companies it represents. “We have standards that they need to adhere to, and other policies to ensure that the customer is well looked after,” he said. “If anything goes wrong, we can then also help facilitate some sort of resolution.”

McFadgen urges anyone booking a rental vehicle to check the rental company is a member of the RVA and to then book directly through the company – not through a secondary website promoting cheaper deals. “There's always a danger when you book through aggregator sites,” he said. “You’ve got very little control. It’s one step removed. You don’t know much about the owner or their reputation.”

“Don’t do it. Save your money”

Ashwell said she’s learnt her lesson and wouldn’t use autoUnion again. “I think I ended up paying $1,000 for a tiny, banged-up Aqua – though I did get back my $500 bond,” she said. She warns others not to make the same mistake as her. “Don’t do it. Save your money.”

autoUnion's response

Across four subsequent statements provided after deadline, an autoUnion spokesperson disputed Ashwell's version of events and suggested she may have been "pranked" during her rental period. "It's quite possible someone had played a prank with them or done it out of anger by opening their fuel tank and putting something inside (we suspect water/drink)," the spokesperson said. They disputed the company's bad Google ratings as "random negative reviews when we charge them for unpaid tolls or police fine" [sic]. They disputed the amount Ashwell paid for her car, and its condition. They requested Consumer investigate their competitors whose "ratings are much worse and their review comments are very similar". They said their insurance was provided by Vero through the broker ICIB. They also said: "When you have more than 2000 customers a month, we can expect four-five unhappy customers who report to authorities ... We run our business very ethically and would never do something like this to scam people."

Tips for renting a car

• Check to see if the company is registered with the Rental Vehicle Association: https://rentalvehicle.co.nz/member-directory/
• Read reviews and check the terms and conditions of any deal you’re interested in. If a deal seems too good to be true, it probably is, and there may be hidden fees.
• Book through the rental company’s website.
• Car hirers should be up front about their insurance policies and who their provider is.
• If you’re asked to pay a bond, make sure you know what you’re covered for and read the terms and conditions thoroughly.
• Have you had a negative experience with autoUnion? Tell us about it: http://www.consumer.org.nz/contact-us