54 firms face probe in alleged car rental scam

Two unidentified car rental companies made a combined total of almost 37 million won ($33,000) by overcharging insurance companies for renting out luxury cars, according to the Financial Supervisory Service (FSS) on Tuesday.

The first company pocketed an additional 20.7 million won in the course of eight months by overcharging insurance companies on rented Audis in 2013, the FSS said. The other company illegally made an extra 16.2 million won over a year by overcharging on the rental of 12 Mercedes-Benz vehicles.

The FSS said it has caught 54 car rental companies on 7,800 fraudulent cases between February 2012 and March 2015. The companies pocketed a total of 6.95 billion won through fraud. The alleged cases involved cars rented to drivers through their insurance company while their own vehicle was under repair from an accident.

The companies used the driver’s information to fabricate documents that showed two or more people had rented out the car, the FSS said.

Legally, a single car cannot be rented out to multiple drivers, but the rental companies were able to continue the fraud, as local insurers are not allowed to share a customer’s information with other insurers.

Each of the 54 rental companies committed the double charging fraud an average of 145 times in the past four years, charging an average of 130 million additional won, the FSS said.

Nearly 60 percent of the cases happened in the Seoul and Gyeonggi areas.

Incheon and Jeju are two regions with the largest demand for car rentals, due to heavy tourism.

Other methods used in the fraud cases included overcharging the rental fee by manipulating records. The rental periods were extended, and fee rates were calculated on cars with different car models with larger engine displacement than those actually rented.

Of a total 7,800 fraud cases over the four years, nearly 24.3 percent of the cases happened to customers who rented out import brand cars.

The 54 companies accused of fraud will be subjected to investigations next month.

BY KIM JI-YOON [kim.jiyoon@joongang.co.kr]