easyCar has issued proceedings this morning in the High Court against the Office of Fair Trading for incorrectly interpreting the law. The law (The Consumer Protection (Distance Selling) Regulations 2000) (DSR) says that companies that sell at a distance such as by telephone or internet (eg selling double glazing or insurance by telephone) must provide their customers with a seven day cooling-off period, during which time customers have an option to cancel the contract they have made without cost. The law exempts transport service companies from this obligation to provide a seven day cooling off period. Bizarrely, the OFT claims that car rental companies do not fall into this category. Therefore, if the OFT is correct, easyCar would be a victim of unfair discrimination compared to other transport services companies such as airlines, trains and buses.
In its proceedings easyCar has applied to the High Court for a declaration that the OFT has incorrectly interpreted the DSR and that car rental companies such as easyCar should be exempt from the regulations. It is the belief of easyCar that the DSR were designed to protect consumers from high pressure selling techniques as has been known to be used in selling double glazing or insurance, not where consumers are making an informed choice based on full provision of information. In the case of easyCar 95% of its bookings are done through its website so consumers are able to make bookings in their own time at their own pace, free from any pressure at all.
easyCar offers low cost car hire to the public at large in 35 sites across Europe, 17 of which are in the UK. Cars can be hired for as little as an hour and at as short notice as one hour. For customers who book in advance or who select off-peak times cars can be rented for daily rates of as little as £5 or hourly rates as low as 50p, but as demand increases, the price goes up. This process is known as yield management. If customers are given a free option to cancel their booking, as interpreted by the OFT, this will undermine the easyCar ability to yield manage, hence reducing the utilisation rate of its cars and will prevent easyCar from offering low cost car hire.
The full description of industries exempt from the DSR are listed as, "accomodation, transport, catering or leisure services" which means that hotels, airlines, trains, restaurants, cinemas and theatres can all offer a no refunds policy but the OFT is excluding car hire. This situation is made all the more ridiculous by the fact that car hire can be booked from most, if not all, airline websites or call centres. So a consumer who buys an economy flight and hires a car from the same source would not be able to cancel the former but would be able to cancel the latter.
"If these bureaucrats get their way they will force easyCar to put up its prices. It's unfair and as we compete with other transport services we might be forced out of business," warned Stelios the founder and chairman of both easyCar and easyGroup.