Rental Car Scams – What They Are And How To Avoid Them

Rahul Sharma
Dolores Bernal
November 30, 2023

It always pays to stay awake, alert, and on the lookout for potential scams. 

In fact, one of the most important things to remember is that as time passes and situations and realities change, scams also change. Scammers are regularly coming up with new schemes and techniques, a lot of which are dictated by the unique characteristics of situations. The world of rental car scams is a great example.

The rental car industry has always been loosely associated by many with certain unscrupulous or questionable business practices. In recent times, the urge for people to travel after the long isolation of the pandemic has resulted in a dramatic surge in demand for rental cars. 

Rental car companies, on the other hand, are still reeling from the complete lack of business during the lockdowns. While this new boom is great for getting business back on track, many companies are finding themselves unable to meet the sheer scale of demand. Prices are at an all-time high while service capacity remains underwhelming.

For us consumers, it means not just paying more, but scrambling to actually find rental car reservations when we need one. When you have an urgent need, that is when you can be particularly vulnerable to the nefarious schemes of scammers.

Threat actors can capitalize on this demand and find new, creative ways to extract money or sensitive information from unsuspecting customers. While this does not mean that you should completely avoid considering car rentals, it is a really good idea to take note and remain vigilant.

In fact, the Federal Trade Commission and various other groups have, for a while, been warning consumers about rental car scams. The Better Business Bureau is also actively monitoring the situation and has released a set of guidelines for customers to stay safe. 

In this situation, it is really helpful to learn all you can about car rental scams and the most common ways you can fall victim to them. This helps you be on guard and recognize the signs if you are about to be scammed.

Here is everything you need to know.

White Mercedes Benz Cars

Photo by Mike Bird

What are Rental Car Scams?

At the most basic level, rental car scams can be put into two different categories. 

The first includes possible shady business practices that might allow car rental companies to induce you to pay more unnecessarily. While some people might not go as far as to call these “scams,” these techniques are often opportunistic and predatory, so we will discuss them here.

The second category of rental car scams covers “real” scams, where you are paying for a service that actually does not exist. In such cases, scammers can rely on a variety of methods to extract financial data and other sensitive information from you and use these to profit. These are the ones you need to watch out for the most.

The key to properly identifying rental car scams is to train yourself to immediately recognize the signs.

Shallow Focus Car Key held by a Man

Photo by Negative Space

5 Most Types of Rental Car Scams

  1. Fake Rental Car Services
  2. Rental Car Pre-payment Scams
  3. Rental Car Insurance Scam
  4. Rental Car Damage Scam
  5. Rental Car Fine Print Scams

Here is a detailed look at the most common rental car scams you might encounter at present.

1. Fake Rental Car Services

What is it? In such scams, the scammers would try and set up a fake rental car service, taking the trouble to give it an appearance of complete legitimacy. They often go to great lengths to achieve this – creating a realistic website, setting up phone lines for customer service, and meticulously putting in other important details that a legitimate business would display.

In some cases, they can even go as far as to use search engine optimization practices to get their fake website to show up in Google searches. Then, when unsuspecting customers use the search engine to look for cheap or quick rental car bookings, their website shows up. The customer would then call the service.

The endgame here is for the scammers to ask you for upfront payment, usually through a prepaid card or gift voucher. To facilitate this method of payment, they might lay before you an inviting deal, complete with special offers and discounts that make it seem lucrative only if you pay using this method. 

They will then ask you to provide the details (card number and PIN code) of the card. Once you have provided them with the details of your prepaid card, they would then quickly transfer money from the card and immediately disappear.

If you call the number again, you will find it disconnected or no one will answer. In short, you would have lost your money without getting the service you needed. 

How to spot it: While these fake rental car service websites might seem convincing on the surface, they are often poorly designed, have spelling mistakes or conflicting information, mention deals and discounts that appear too good to be true, and do not include any physical address. If you catch one of these websites when they have been freshly created, you might also spot suspicious things like filler text and links that lead nowhere. These are all huge red flags.

Further, you can easily figure out if you are being targeted by rental car scammers if they ask you for information or payment upfront, requiring you to pre-pay for the service using a prepaid or gift card. This is a dead giveaway. As this is very far from the standard practice you can expect from legitimate rental car companies, at that point, you can be sure that you are dealing with a scam.

How to avoid it: When looking for rental car deals, deal directly with known and trusted brands by going to their official websites or calling their official customer service numbers. If you see a website promising a lucrative deal, research the brand and verify through official channels. Scammers might try to impersonate a legitimate rental car company. In such cases, you should find and directly contact the company to check.

Most importantly, never pre-pay for a rental car order with any kind of prepaid card or gift card. Always use a credit card for payment, which gives you the option to dispute the charge in case you are scammed – a feature that you will not be able to take advantage of with a prepaid card.

2. Rental Car Pre-payment Scams

What is it? In this scam, fraudsters exploit the eagerness of potential renters by asking for pre-payment before providing any rental car services. These scammers often create a façade of legitimacy, enticing customers with appealing deals, special offers, and discounts. They may set up a seemingly authentic website, complete with engaging content, realistic visuals, and even customer service contact information.

The primary goal is to convince unsuspecting customers to make upfront payments, usually insisting on the use of prepaid cards or gift vouchers for the transaction. To sweeten the deal, scammers may claim that these payment methods come with exclusive discounts or benefits. Once the customer provides the details of the prepaid card, including the card number and PIN code, the scammers swiftly transfer the funds and vanish without providing any rental services.

If customers attempt to contact the supposed rental service after making the payment, they often discover that the provided phone number is disconnected, or no one responds. Essentially, individuals fall victim to this scam by losing their money without receiving the promised rental car services.

How to spot it: Scammers may present enticing deals, special offers, and discounts, insisting on payment through prepaid cards or gift vouchers. The request for card details, including the card number and PIN code, is a red flag.

How to avoid it: Deal directly with reputable rental car brands through official channels. Verify the legitimacy of deals by researching the brand and avoiding pre-payment requests with prepaid cards or gift cards. Use a credit card for payment to retain the option to dispute charges if necessary. If a request for upfront payment seems unusual, it is likely a scam, as legitimate rental car companies typically do not require pre-payment through such methods. Always exercise caution and report suspicious activity to the rental company.

3. Rental Car Insurance Scam

What is it? Now, we come to some shady business practices that you need to watch out for, especially when getting rental car services from smaller or less well-known companies. These might not be legally tantamount to fraud but nevertheless represent techniques that are designed to mislead or coerce you into paying more for your service.

The insurance scam is one of the most commonly found. While getting a rental car, you will be asked to pay for insurance for the duration of the rental. In many cases, the company might also try to sell you an enhanced insurance plan with more coverage or extra features like roadside assistance. There are quite a few scare tactics that companies might employ to convince you to sign up for this insurance.

In reality, it might be a good idea to have basic insurance when signing up for a rental car. However, most users have existing insurance coverage for their own vehicles that would still be applicable for car rentals. Additional or optional insurance, while it may sound like a good deal, is often redundant or repetitive. 

In order to make sure that you opt-in for these, rental companies might try to enforce a large deposit if you refuse. This way, you would be forced to spend a lot extra daily to get your rental car service.

How to spot it: Watch out for any extra or supplementary insurance coverage that rental companies try to sell you at an added cost. If you encounter coverage types like personal accident coverage, coverage for belongings or personal effects, supplemental liability protection, or collision damage waiver, you should have your radar up.

Similarly, the rental company might insist on a larger deposit if you refuse these additions. In some cases, the company might outright refuse to rent you a vehicle if you do not opt for these. This is considered illegal in most places.

How to avoid it: Understand that your existing insurance and even your credit card contain coverage for car insurance, giving the minimum mandatory protection that you need when renting a car. If your rental company insists on additional insurance, you can simply refuse to pay extra. If the company then refuses to rent you a vehicle, you can resort to a legal remedy.

4. Rental Car Damage Scam

What is it? For some unscrupulous car rental companies, claiming that you have damaged the vehicle while renting it can be one way to scam you out of extra money. Typically, this happens when you return the vehicle after the rental period and the company points out some damage to the vehicle that was already present when you received it but escaped your attention. Since rental companies will insist on you signing a form stating that you received the car in good condition, this now becomes a valid way for them to charge you extra.

How to spot it: If you have not properly inspected your car during delivery or at the site, you might find your rental company insisting you pay for vehicle damage after you return the vehicle. In most cases, they will even show you the “exact location” and nature of the damage too.

How to avoid it: You should always carefully inspect the vehicle before signing for it during delivery or at the car rental site. Some rental companies will purposefully give you weather-beaten or damaged vehicles so that they can carry out this scam later. Before taking delivery, go over every inch of the exterior and interior of the car and notice its condition meticulously. You should also test drive the car to see if all the internal components are functioning properly. Most importantly, take a lot of close-up pictures of the car, and a video while walking around it. Make sure the pictures and videos show the date and time. This can then be conclusive proof if you need to contest one of these damage claims later.

5. Rental Car Fine Print Scams

What is it? In most cases, this is the easiest way that shady rental car companies carry out their scams. A long contract or form with lots of fine print is a nightmare for any customer to properly read and understand, especially when they are in a hurry to get a rental car. Companies might use this opportunity to slip in absurd conditions and fees into the contract and once you sign it, you no longer have any idea what you signed up for. There are many different ways companies can force you to pay extra using this technique. Your contract might mention a hefty extra fee if you return the vehicle without a full tank of fuel. It might include a clause where the company is entitled to high “processing” fees when you cross toll booths. There might be clauses where the rental company can charge you extra if you travel out of state. There might even be enormous extra charges for late returns.

How to spot it: Unfortunately, if you have signed the contract on a car rental without reading it properly, you are already exposing yourself to this scam and there is nothing you can do after the fact. It is a good idea to quickly check if the form has a lot of fine print or if a section of the form is stapled shut as a good first step to check for this scam.

How to avoid it: Always read your contract in full, including all the fine print, before signing and taking your rental car off the lot. The time you save by not doing this is not going to be worth the enormous monetary loss you might incur as a result.

Avoid Rental Car Scams – Best Practices

While there will be times when you might need a quick and cheap rental car, there is no need for concern. All you need to do is watch out for the signs and employ some basic precautions and best practices in order to steer clear of scams, fraud, or shady business practices.

Whenever trying to rent a car, follow these simple mantras.

1. Research the Company

The best way to avoid impersonators or fraudulent websites is to research the company. Scammers impersonating an established car rental company can be found easily enough if you choose to consult the official website or call their official customer service phone line. If it is a relatively unknown company claiming to provide great prices or deals, you can use the internet to research the brand name. Simply look for ratings and reviews for the company. If it is connected with a scam, it is likely that some users have already experienced it first-hand and left appropriate reviews behind.

2. Scan Websites and Ads

When scammers try to defraud customers using rental car scams, their primary mode of contact with potential targets usually involves a spurious website and sponsored ads on search engines like Google. If you are searching for deals and discounts on a rental car or a quick turnaround for the rental process, be wary of the links appearing as sponsored ads on your search. If you do visit some of those websites, scan the website thoroughly for red flags. Look out for spelling errors, poor design, and missing addresses. If the website asks for personal information or payment details beforehand, take special care. If anything seems suspicious, get out and instead get your car rental from a reputable, established company.

3. Never Pay Using Prepaid Cards

Most established car rental companies discourage the use of prepaid cards or gift cards as a means of payment. Even the ones that accept this mode of payment will only do so when your rental period is complete. If a rental company asks you to pay upfront using these payment options, you can be certain that you are being scammed. At that point, do not pay anything or share any details of your card with the company to avoid monetary loss. A great alternative is to always use a credit card, where you can dispute fraudulent transactions after the fact.

4. Join a Loyalty Program

If you definitely want deals, discounts, privileges, and priority service, consider joining a loyalty program. Many established and reputed car rental companies offer generous loyalty programs. Research the criteria for a few, choose a provider, and rent from them a few times to qualify. This gives you the perks you need without having to resort to dealing with a shady provider. 

Consider Identity Theft Protection

Accounting for the resourcefulness and innovation of scammers is quite a hefty task and you can surely benefit from some expert help.  With a professional identity theft protection service, such as Aura, you can build important safeguards around your personal and financial information if you do fall victim to a scam. 

Monitoring offered by an identity theft protection service can alert and protect you. This can be a good option if you are frequently using online resources to locate and book rental car services.

Read Other Types of Scams To Avoid: