The car hire scam you must not fall for

This scam will see you paying hundreds for a car you never receive...

Few of us ever hire cars outside a foreign holiday - the UK is compact, unlike Australia, Canada, or the United States where air travellers often rent and leave cars at airports.

Before Christmas, my friend Celia told me as she was visiting folk in Scotland, she would hire a big 4x4 vehicle (she owns a BMW Mini, great for London, but useless for partner, three children plus luggage to Perth).

She showed me an advert that had been running almost every day full page on the back of the Guardian. I'd seen it there – and elsewhere – as well but ignored it as I didn't need a car hire.

The ad came from rentmac.co.uk – not one that I had heard of. The cars and prices looked great from a Volkswagen Polo at £20 a day to a Range Rover Sport at £106 a day. Celia wanted to splash out on the Range Rover – with five people and suitcases on board, it seemed stupendous value.

But car hire comes with terms and conditions, the ease (or otherwise) of collection and delivery and many potential extra fees.

So off to the rentmac website for details. These were limited to a non-geographic 0844 phone number and an address at 100 Pall Mall, London. It's only “open” Monday to Friday 9 to 5 – not much use if the engine fails at night or over a weekend.

Now 100 Pall Mall is an impressive address. But it's an odd place for car hire which needs substantial, low cost storage and servicing space. It is, in fact, a serviced office with a mail drop facility from £99 and its only location.

Budget Car Hire, for instance, lists depots from Aberdeen to York (alphabetically, not geographically!).

So – a vital question this – who owns rentmac? There is no clue in the small print (some of which is in poor English). But the website is registered to Rentmeanycar at the same Pall Mall address.

And Rentmeanycar is a registered company – incorporated on October 28, 2010 with one director. Its website also offers hire cars (in less than perfect English again) with “free delivery and collection” - apparently anywhere. Rentmeanycar offers one address – a serviced office in Berkeley Square (also unsuitable for a rental car depot).

How Rentmeanycar and Rentmac acquired so many cars in so short a time is difficult to discern. But its prices are excellent.

It offers a Mercedes Vito people carrier worth around £20,000 at £22 per day – a similarly priced VW Passat from Budget costs up to £150 a day. The Range Rover Sport (basic list price is about £46,000) is £106 a day while a similar car from Signature Car Hire (a specialist top end firm) is from £250 a day plus a £2,500 deposit.

The economics of car hire are daunting. But very roughly, the formula is to divide the car's list price by around 180 for a daily rate. The Rentmac Vito price is some 900 times its showroom value.

Additionally Rentmac only accepts payment by bank transfer, not the normal credit card. This protects you in case of business failure but also allows the hire firm to deduct extras if the tank is empty or if there are scratches and dents.

It did not auger well. So Celia went elsewhere for her rental and paid more.

Others, however, reported paying several hundred pounds but receiving no car. And just before Christmas, the Guardian told readers not to deal with rentmac due to the volume of complaints it had received.

Obviously, national newspaper adverts gave the firm a high profile.

So I'll let you into a trade secret. While you pay upfront for a classified ad – car sales, births, marriages and deaths – companies can defer payment. Some use an advertising agency to pay the paper; or they can do a deal with the publication, paying a percentage of business generated (commonly used in those ubiquitous cruise holiday ads); or, they tell the paper they have no money until the ads produce customers but, as an alternative to credit checking, they offer an insurance-backed guarantee (known as an indemnity) that will pay up if the firm fails.

In the meantime, I asked Rentmac for two days use of a basic £22 a day VW Polo. I am still waiting for a reply.

The old adage that if it looks too good to be true, it probably is, would seem to apply here.

Award-winning scams expert Tony Levene explains why he's writing a blog about scams and why he is The Scam Magnet!