Zipcar Must Pay $300K For Renting Cars without Recall Repairs: NHTSA

Federal auto safety regulators issued a consent order against Zipcar, after the company rented vehicles with unresolved recalls, potentially putting consumers in danger.

Zipcar is a car-sharing company, which was acquired by Avis Budget Group in 2013, but operates differently than a traditional car rental service. The company charges annual membership fees that allow users to make vehicle reservations through an app, which are billable by the hour, day or longer.

Rented cars are returned to nearby street locations without consumers needing to visit specific rental facility locations. However, it has been discovered that Zipcar kept vehicles in service even after manufacturer recalls were issued.

The National Highway Traffic Safety Administration (NHTSA) announced the Zipcar consent order (PDF) on October 16, which is the first-ever enforcement action against a rental company for providing cars to customers that still need recall repairs.

The recalls involved mechanical problems and other safety concerns, which required repairs to protect drivers or vehicle occupants. The NHTSA determined that by failing to service open recalls, Zipcar exposed drivers to an avoidable risk of accidents or injury.

“Vehicles with open, unrepaired recalls pose a safety risk to everyone on the road. NHTSA takes violations of the Safety Act very seriously,” NHTSA Acting Administrator Ann Carlson said in a press release. “The agency will continue to use the full scope of its enforcement authorities to protect the public from safety defects in their personal vehicles or in a vehicle they rent.”

Zipcar Recall Consent Agreement

The NHTSA used its regulatory authority under America’s Surface Transportation Act of 2015 (FAST Act) to issue enforcement and prohibit the company from renting recalled vehicles that have not been repaired.

The agency first opened an investigation into Zipcar in 2018, but the consent order stems from a 2017 recall. The NHTSA said Zipcar failed to repair vehicles before releasing them for rental to consumers.

Zipcar said less than 50 of their 12,000 vehicles in the global fleet were in violation of the recall in question and called it a “unique mileage-based recall that did not require immediate grounding” of vehicles. The company said those vehicles are no longer in the fleet.

The NHTSA indicates Zipcar must pay a civil penalty of $300,000. Half of the penalty must be paid up-front. The other half is deferred and payable if the circumstances the agency outlined are not met.

The requirements of the consent order call for Zipcar to submit an audit report of vehicles with open recalls at any time within 150 calendar days after the effective date of the order. Additionally, the company must update employee training materials about recall compliance.

Zipcar must also update its compliance procedures, which must be reviewed by outside counsel and submitted to the NHTSA for additional review.

The consent order is effective for one year and may be extended an additional year if Zipcar fails to meet quarterly progress performance obligations. Zipcar agreed to the consent order and said it began initiating recall policy improvements after the NHTSA first launched its investigation in 2018.

The improvements made to date include a centralized documentation system for recalled vehicles, making recalled vehicles unavailable for new rental reservations, and addressing the recall remedy status of vehicles.

The company also said it increased communication between Zipcar’s home office and field offices about grounded vehicles.

Recall campaigns can be checked for any vehicle using the NHTSA’s recall locator website and the 17-digit vehicle identification number (VIN) of the vehicle in question.