Hiring a vehicle is a great way to explore a foreign country on your own terms.
Unfortunately, some businesses renting out scooters, cars or jetskis are taking advantage of naive travellers to make an extra buck.
According to the Department of Foreign Affairs and Trade, many Australians overseas have been harassed by transport operators who claimed they have damaged a hire vehicle. Businesses then demand thousands of dollars and withhold customers’ passports until they pay up.
Here’s how to protect yourself from vehicle hire scams while travelling abroad.
There’s nothing travellers fear more than losing their passport overseas. Fraudsters recognise this and will often demand a passport as a deposit, knowing their customers will do anything to get it back.
Travel pages on social media are awash with reports of vehicle rental scams, with operators often pointing to minor or even pre-existing damage as a reason to demand large amounts of money.
Shonky rental operators have demanded tourists hand over hundreds of dollars for minor scratches on rental scooters.
One scam victim revealed on Reddit that an overseas business demanded almost $600 for minor scratches on a motorbike. They had little room for negotiation since the operator was holding onto their passport.
A different Reddit user reported they were told to cough up $3600 – ultimately negotiated down to $1300 – for flipping a jetski, while another was falsely accused of smoking in a rental car and hit with a cleaning fee.
One scam victim revealed on Reddit that an overseas business demanded almost $600 for minor scratches on a motorbike.
The US Embassy in Thailand has also warned travellers that some travel operators in the country have kept spare keys of rental scooters so that an accomplice can steal back their vehicle from popular tourist sites. Victims are often forced to pay a hefty replacement fee, even if they purchased insurance.
Even if a passport is not being held hostage, businesses may threaten tourists or exploit their ignorance of exchange rates to squeeze them for cash.
Unfortunately, most insurance policies don’t cover losses when scammers have abused your confidence or deceived you.
“Most comprehensive travel insurance policies will cover a lost or stolen passport or credit card,” CHOICE insurance expert Jodi Bird explains.
Most insurance policies don’t cover losses when scammers have abused your confidence or deceived you
“But if you willingly handed your passport to a hire car company as a deposit, insurers will probably say that any resulting loss or damage would be due to your failure to safeguard your travel documents, and therefore not cover it.”
Even when your passport isn’t involved, if you are pressured to hand over money in a rental vehicle scam, Jodi says it will probably not be covered by your travel insurance as it’s classified as a “commercial dispute” rather than an “insured event”.
To avoid this scam, remember: Stop. Check. Protect.
Stop
The Australian government’s advice is to never hand over your passport as a security deposit.
It has become common in some countries for businesses to ask for your passport as collateral, but that does not make it safe.
Handing your passport to a shonky transport operator gives them a lot of leverage. You may have little room to negotiate if they claim you damaged their vehicle.
The Australian government’s advice is to never hand over your passport as a security deposit
As a deposit, offer cash or a photocopy of your passport. It can be handy to carry a few copies with you while you are travelling.
If an operator insists on your passport, it may be safest to just look elsewhere for vehicle hire.
Check
In the internet age, even businesses off-the-beaten-track may have a digital presence.
Read online reviews of local rental companies and look for warnings from previous scam victims or mentions of businesses demanding a passport as a deposit.
If you are able to, use a well-known hire company.
Protect
You can protect yourself by taking photos or videos of the vehicle before you hire it, noting any prior damage.
If there is a condition report included with your rental contract, ensure all damage is noted down before you sign. If not, at least get staff to acknowledge any bumps or scratches before you head off.
Do the same checks when you return the vehicle in case you are contacted later and accused of damage.
Report passport theft to local and Australian police once you get home. Hold on to the police report – you will need this when you apply for a new passport.
You should also contact IDCare, Australia’s national identity and cyber support service, if you are concerned your identity and personal details have been compromised.
Will my insurance cover me if I actually damage a rental vehicle?
This will depend on your policy and there’s a few things to consider.
Many hire car companies will offer insurance with a hefty excess, which can be reduced for an extra upfront fee.
Alternatively, your travel insurance may pay the excess for you if you have collision damage excess cover. This is included on some comprehensive policies or may be available as an optional extra.
Your travel insurance may pay the excess for you if you have collision damage excess cover
If you are covered by this, in the event of an accident, you would have to pay out of pocket to the rental company first, then claim a reimbursement from your travel insurance later.
Motorbike and mopeds are often excluded from car hire cover in travel insurance, so check your insurer’s definition of “rental vehicle”. You may have to take out additional cover for motorbikes and mopeds, but some insurers may still exclude rental excess, only covering you for medical expenses in the event of an accident.
Even if you are covered, you have to follow both local laws and the terms of your insurance policy.
Some insurance companies also require you to hold an Australian licence (including a motorbike licence if you are riding one), even if it isn’t necessary in the country you are in
Some countries require you to have an international driving permit or a driving permit issued by that country. If you don’t have the right licence, you may be breaking the law and probably will not be covered by your insurance.
Some insurance companies also require you to hold an Australian licence (including a motorbike licence if you are riding one), even if it isn’t necessary in the country you are in.
The same thing goes for other rules like alcohol consumption, where you need to follow both the local laws and your insurer’s policy for Blood Alcohol Limit while driving or operating recreational vehicles.
Going overseas? Get your free travel insurance guide now
James is a journalist with CHOICE's editorial and investigations team, decoding complicated consumer issues and reporting on how corporations and businesses affect the lives of Australians.
He has previously created podcast series for We Are Explorers and Protect Our Winters Australia, and has published in Cosmos and The Citizen. James has a particular interest reporting on science, environmental and social issues, and was a recipient of a JEERA Ossie Award for his journalism.
James has a Master of Journalism and Bachelor of Science in Physiology from the University of Melbourne. LinkedIn
James is a journalist with CHOICE's editorial and investigations team, decoding complicated consumer issues and reporting on how corporations and businesses affect the lives of Australians.
He has previously created podcast series for We Are Explorers and Protect Our Winters Australia, and has published in Cosmos and The Citizen. James has a particular interest reporting on science, environmental and social issues, and was a recipient of a JEERA Ossie Award for his journalism.
James has a Master of Journalism and Bachelor of Science in Physiology from the University of Melbourne. LinkedIn
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