Europcar scandal: Have you been hit by a bumper repair bill?

There have been more allegations today against Europcar related to a growing repair costs scandal that threatens to engulf the wider rental car sector.

Here's everything you need to know.

What has happened?

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In June the Daily Telegraph revealed a series of allegations against Europcar after Trading Standards raided the head office of its UK arm in Leicester.

In short the paper said it had "evidence" that the company routinely inflates the costs of repair bills by as much as 300 per cent.

How is it supposed to have overcharged?

Customers are in theory only supposed to be charged the "true cost" of any repairs for accidents or knocks that fall outside of any insurance they have taken out, plus an admin fee.

But the Telegraph claimed instead that "repair prices are grossly inflated via secret pre-agreed deals between Europcar and suppliers, which directly financially benefit Europcar at the expense of the customer".

How this works in practice is that the consumer gets an invoice for the "total" cost of the work. Europcar then receives a second invoice for the "true" cost of the work - and is issued a rebate by the supplier for the "difference between the first and second invoice".

Having issued an invoice claiming to represent the real cost when it is in fact a pre-agreed and inflated price could be a breach consumer rights laws.

The Serious Fraud Office is now said to be investigating the firm.

What are the new allegations?

The Telegraph says that a "whistleblower" at Europcar has revealed that staff are financially incentivised to find damage to vehicles and send them for repairs, even where scratches or dents are "barely there or non-existent".

There are said to be rewarded with £4 per vehicle they refer for repair, "regardless of whether a repair is actually warranted".

The whistleblower added that counter staff at the firm are expected to sell either additional insurance or vehicle upgrades to one in three renters, raising the prospect of further "mis-selling" allegations.

What sort of costs are involved?

Examples cited include a windscreen repair that was quoted at a rate of £615 plus VAT. In that case the firm that carried out the work, National Windscreens, quoted £176 plus VAT when approached directly.

The BBC says on its website Europcar quotes prices of up to £25 for a replacement wiper blade, and up to £350 for a new tyre. Its admin charge is £40 per repair.

The company has issued a statement that the investigation could result in costs of up to £30m. That, says the BBC, equates to around £60 per customer who was overcharged.

If the figures quoted above are correct, that figure could end up being far higher.

As for the financial punishment the firm might face, if it is found guilty of "fraud by misrepresentation" it could face a fine of ten per cent of its annual turnover, which is around €2bn (£1.8bn). So that's anything up to £180m.

It could also then be open to class action-style lawsuits from customers, says the Telegraph.

Are there wider implications?

Yes. For Europcar the issue could spread worldwide: it operates in 140 countries and has already faced a court order to pay compensation of A$100,000 (£61,000) in Australia for "making false or misleading representations about consumers’ liability in the event of vehicle damage".

There are also claims that Europcar's alleged actions are symptomatic of the wider industry and consumer group Which? has called for an "immediate investigation" in the sector.

In the UK, there is even a suggestion that the UK taxpayer could be implicated, which might yet politicise the scandal. The Ministry of Defence and Network Rail have contracts for staff cars with the firm worth a total of £12m.

What should I do if I think I've been overcharged?

First complain to the company and explain the circumstances. Showing an awareness of this scandal and citing evidence of cheaper quotes obtained directly will be helpful.

If you are dissatisfied with the company's response, Yahoo News advises you contact the trade body for UK-based car hire firms, the British Vehicle Rental and Leasing Association (BVRLA). If you hired in Europe then contact the European Car Rental Conciliation Service.