Car Rental Firms to Screen Drivers

It’s about to get much harder for Californians with bad driving records to rent cars. The largest rental car companies are preparing to check California Department of Motor Vehicle records electronically, and will turn away people with too many violations. Similar programs in New York and Florida have resulted in rejection rates of between 4% and 6% for residents of those states.

The companies--among them Hertz, Budget, National and Avis--say such screening will help fight high insurance costs and lawsuits arising from accidents involving poor drivers. Out-of-state drivers won’t be checked at first, but that is expected to change as the companies integrate their computer programs with those of motor vehicle departments in other states.

The electronic checks advance the crackdown on bad drivers beyond the honor system. Budget and National have been asking California customers about their driving records and refusing to rent cars to people who acknowledge certain violations. Budget said an audit of drivers who had been in accidents found that only 2% of renters misrepresented their driving records. Even so, the company prefers the more accurate screening by computer.

In California, rental car companies won’t have direct access to DMV records. Instead, two vendors approved by the DMV will run the electronic checks for them.

When a customer arrives at a rental car counter, a clerk will feed the driver’s license number into a terminal. The vendor’s computer will find the driver’s record in the DMV database and compare it to standards developed by the rental car company. The computer will then send back an electronic message telling the clerk whether the applicant is approved.

The standards vary slightly among companies, but they generally exclude drivers with suspended or revoked licenses, drunk-driving convictions within up to six years and three or more accidents within three years.

Because California has stricter privacy laws than many other states, rental car employees won’t be told specifically why a driver is rejected, at least during the early phase of the program. DMV program manager Janis Saxon said the employees may eventually receive general explanations, such as “too many moving violations” or “license suspended.”

Saxon said rental companies may use the records to develop their own “bad driver” lists. Hertz and National are already doing so in other states. Said National spokesman Michael Olsen, “Why should a New York driver rejected in New York be allowed to rent a car in Tennessee,” where electronic access to New York records is not available.

However, Budget said it gave up maintaining bad-driver lists based on DMV records. “Motor vehicle information changes from day to day,” said Dennis Stuth, director of risk management at Budget. “The difficulty is making a decision to rent or not to rent based on information that may be outdated or is sometimes incorrect.”

The screening is not cheap. Rental car companies must pay the DMV charge of $5 for each record check plus the vendor’s fee. The companies expect that reduced liability costs will more than cover the cost of the program. “If we have to raise rates to cover it, that would sort of defeat the whole purpose,” Stuth said.

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Claim-Staking: “Important information about your homestead rights,” says the official-sounding letter from County Recording Services.

For a $30 fee, County Recording says it will help home buyers prepare a legal document called a homestead declaration, which can protect ownership interest in a house if creditors file claims against it.

What the letter fails to note is that it costs only $5 for a homeowner to file a declaration himself with the county recorder. Stationery stores sell homestead declaration forms for about $1 apiece.

The letter also fails to mention that the declaration may turn out to be worthless, since many title companies do not recognize them.

A homestead declaration protects a portion of the equity in a primary residence from creditors who obtain a judgment lien against the house. The amount of equity protected is $50,000 for a single person and $75,000 for a family. The amount is higher for people who are elderly or disabled.

A declaration discourages creditors from forcing the sale of a house to collect debts. That is because there must be enough equity to pay the homestead and all creditors.

If a homeowner voluntarily sells the property, the equity is also protected, provided it is invested in another residence within six months. The problem is that some title companies, relying on an obscure court decision, have been ignoring homesteads and forcing voluntary sellers to pay judgments before the home is sold.

County Recording owner Joan Grover said she was unaware that title companies have been ignoring homestead declarations. Regarding her fee, she said that although she takes in about $100,000 a year from the service, expenses eat up almost half of that. “No one is getting rich here,” she said. She added that “some lawyers charge $125 to do this.”

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Phone Home: Customers unhappy with Wild Oats, a natural foods chain based in Boulder, Colo., can take their complaints straight to the top. The president’s home phone number is printed on every shopping bag.

The practice was started two years ago as a way to keep communication open after expansion into New Mexico made it hard for executives to visit the stores regularly. President Mike Gilliland said customers who call seem surprised when he answers the phone.

“A lot of people think it’s a gimmick, but it’s not,” he said. He said the family has just one line. “The phone rings in our kitchen and in the bedroom.”

Callers usually are checking on delayed shipments or suggesting store locations. One regular, a Denver woman, reads from the Bible. “My wife usually takes that call,” Gilliland said.

With the company’s first California store opening in Pasadena in November, Gilliland said he plans some changes: “I think I’m going to get an answering machine.”