Turo is quickly going downhill – Is Turo a scam?

Hello everyone! I hope everyone is staying safe during the Coronovirus epidemic. That being said, I wanted to update everyone on a terrible experience that I had recently with the Turo claims process. If you are considering sharing a high line vehicle I would highly recommend you reconsider.

It’s been a while since I’ve updated my blog. Since my last post, a bunch of stuff has happened that has negatively affected my views on the profitability of car sharing on apps like Turo and Hyrecar. Here’s an overview of a few of Turo’s changes that I believe impact car-sharing hosts the most.

Unethical, if not Illegal Claims practices

Turo’s predatory shift to an anti-host company is becoming more apparent each day. Not only did the payout structure that Turo offered change, but they have begun to be extremely aggressive against paying out damage claims. They will find tiny “damage” and call it preexisting damage to avoid paying out funds on your new claim. Dozens of hosts have complained on a private owner’s group about the predatory nature of the Turo claims process. Simple scuffs that can be buffed out are identified by Turo as preexisting damage (they would not have covered the “damage” if you reported it) and thus hundreds, if not thousands of dollars are deducted from an approved claim payout.

Turo will deny a claim as “wear and tear” and then consider it pre-existing damage when you file a claim that is covered to reduce the amount it has to pay out.

Turo Deducted $710 for this scuff. Can you even see it?

Here are some photos of the damage caused by the guest.

I’ve also noticed that Turo will now only initially provide damage estimates using aftermarket parts and even in some cases used/recycled parts! Check out this recent damage estimate that I received from Turo for a 2016 BMW 740i M-Sport. The initial quote they sent only pays for economy parts and recycled parts. Keep in mind, this is what the car looked like before the trip. The car had a clean carfax and was in pristine condition. It’s entirely unreasonable to ask hosts to restore the car with anything other than OEM parts to return the car to the condition it was delivered to the guest in.

Recycled parts on a 90k+ MSRP Car? Non-OEM windshield? Come on.

Based on Turo’s damage estimates they do not expect you to restore your car to OEM condition. They will try to pressure you to put aftermarket parts on your car. This is a reason why I do not want to continue renting Highline cars on the platform.

Another thing you might notice is the fact that they only allotted $489.69 for a new windshield on the car. Not only is this laughably low, but Turo also failed to include the cost of reprogramming various safety features in the car. I filled out a form at Safelite (who is actually Turo’s go-to windshield replacement company in the past so I have no idea why they would quote a price from windshieldstogo.com who have a site that looks like it was programmed by a middle schooler). Safelite quoted $1059.99 for the windshield which is more than double the lowball estimate provided by Turo.

This brings me to another one of my concerns about the Turo claims process. I recently had a car key not get returned- under the $0 deductible Standard protection plan I should be able to be paid out for the full cost of an equivalent replacement. When I provided Turo with an invoice for a replacement key from the local BMW dealership, the claims agent said that they found the part for cheaper “elsewhere” and thus were only willing to pay out a lower number than the invoice that I provided. This means that they expect hosts to acquire replacement parts on their own, payout of their own pocket, and then wait weeks for the part to ship. They believe that this is reasonable – but I do not. If I had known that this is the sort of behavior that Turo was going to exhibit I would not have expanded the fleet with nicer cars.

Does Turo really expect hosts to buy parts on their own?

You can see below a few examples of such cases. Here is a case where a host only received $52.08 for damage claims that are estimated to be $1073.9 because of preexisting damage. While the damage on the car is present in the pre-trip, the condition of the bumper is significantly worse than it was pre-trip.

Turo doesn’t realize that by sending out lowball estimates they force hosts to take the car to a body shop that will supplement a 5k job to 15k. In the past, I could use the initial funds they provided and use an independent worker to get the job done. Now that the initial estimate is way too low hosts have to get the job done at a shop that can submit supplements to Turo.

Change of owner payout structure without notice

Another one of the changes that I want to mention is the way that Turo has changed the owner’s compensation structure. When I first started hosting on the platform the Standard protection plan carried a $0 deductible and a 75/25 profit split. About a half a year ago Turo announced without notice that it was changing the structure to 70/30. While this may seem like a change that should be considered by the host as a risk when they are starting their business, I do not believe it was fair to not give notice to their hosts so that they could make plans to react.

For potential hosts: You must be aware that a change in payout can happen at any moment, without notice. Make sure you have a plan B if you need to liquidate the fleet.

I was approached by Turo in 2019 to pilot a program with AFC and Stratim to acquire cars through a financing program. This flooring program enabled Turo hosts to get approved for significant lines of credit with high interest and flooring fees. Given the fact that I was only able to acquire this line of credit through Turo’s help, I was irritated that they had changed the compensation structure AFTER I had expanded the fleet. Because the change in the compensation equated to almost 9.3% against my bottom line, I was effectively forced to change to the Turo Basic plan in order to maintain sufficient cash flow.

While I appreciate Turo’s help in getting approved for the line of credit, I am still irritated that I acquired 250k in inventory thinking I was still going to be able to have a 75/25 profit split and have Turo change it to 70/30 after I made a sizeable investment.

The switch to the Basic 85% protection plan was extremely stressful. While the change generated significantly more monthly revenues (due to the increased risk taken on by the host), the constant worry that a local deadbeat renter will damage the car contributed to a great deal of anxiety during the time I was on the standard plan. Something to note: Turo doesn’t allow you to cancel or pre-screen your guests without penalty. If you have instant booking activated anyone can book your car immediately. This means that if you want to cater to the vast majority of high-quality guests (tourists) you must make your car available in the same manner to local guests.

Equal verification processes for unequal guests (Locals vs. Tourists)

This is something that not even the Rent-A-Car companies do. They understand that local renters are inherently riskier than tourists. In fact, more than 75% of my claims from the past year occurred during a reservation with a local guest. Not only are locals on average more irresponsible than tourists they also do not have the funds or primary insurance coverage to pay out for the damage they know they caused. Not to mention that local hosts are more likely to retaliate should they be charged for fees like mileage, smoking, and cleaning.

Local guests are much riskier than tourists but Turo does not allow you to screen or require higher deposits.

Turo needs to allow an option to selectively pre-screen. While I would happily rent out any car for 1 day to a tourist, I wouldn’t be willing to rent a car to a local for the same price or protection plan. I think a good way for Turo to help out hosts alleviate said risk is to have different protection plans for various guests. If I had the option to use the standard $0 deductible plans for local guests and basic $3000 deductible plan for tourists I would switch to that in a heartbeat.

Turo does not provide guest submitted insurance to Hosts

What does this mean? Turo currently offers an incentive for guests to provide their insurance information during the time of booking. If a guest provides their own insurance policy, they would get a reduced deposit requirement. This only benefits Turo. Hosts cannot request this information to attempt to collect without involving Turo.

Turo will collect for damage from the guest and only give the host a fraction of the collected funds.

If a host is on the 85% plan, they will be responsible up to the $3000. Assuming the damage is worth $1000, Turo would give the host $200 as part of the basic protection plan. What many hosts don’t realize is that this $200 gives Turo the right to go after the guest’s insurance for the FULL COST of the damage. In some cases, Turo will be able to bill the guest’s insurance for loss of use and diminished value as well. This leaves the host with a car that now has a damage report on its Carfax and $800 in repair bills while Turo pockets all of the money from insurance.

If a host is on the 70% plan Turo will do their best to attempt to pay out the minimum and then collect the full retail cost of repair from the guest’s insurance. This incentivizes them to pay out the absolute minimum to their hosts.

You may ask: “why doesn’t the guest provide the host with his insurance plan?” Unfortunately for us, Turo provides “protection plans” to guests that book cars. What the guests don’t see is that Turo’s plan is secondary coverage! This means that Turo’s coverage will ONLY KICK in after their primary coverage (the insurance policy they provided Turo) is exhausted. Uninformed guests think that their maximum out of pocket exposure is the deductible of the plan they purchased with Turo, so they decide to ignore the host’s requests for said information.

What will I do now?

Going forward I will be liquidating the more expensive cars from my fleet. It is no longer worth the risk. Turo doesn’t understand that this unethical behavior will alienate their most loyal hosts. I have always been an advocate of building a relationship between hosts and Turo but now I see I am gravely mistaken. Turo does not see you as a partner but only as a disposable independent contractor.

The only way to make money on this platform is to provide undermaintained and subprime vehicles (shooters) to guests that are unqualified to rent from other Rent-A-Car sources. If you want to provide a horrible experience to your guests and charge them excessively for mileage overage, smoking fees, and other miscellaneous expenses you will do well (bear in mind these fees are generally paid out by Turo as they do not have the ability to collect balances from said customers).

In conclusion, it’s still possible to make a decent chunk of change as a Turo host. It’s just become a little harder to do than in the past. The increasing competition and increasingly anti-host practices by Turo have made being an honest host an almost unprofitable one. I hope that Turo will realize that hosts who provide a consistent and quality experience are the ones that will help their brand become a major player in the car rental market. Actions like the ones that I have posted about today are what will continue to deteriorate the relationship between Turo and its most loyal hosts and lead the platform gaining a reputation of being home to scams and bad experiences.

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