Fraud in the Rental Car Industry: Millions at Stake in Frankfurt

Frankfurt am Main is currently grappling with a significant case of tax and social security fraud in the rental car sector, which has reportedly reached alarming levels. Over the past three years, fraudulent operators have allegedly caused damages amounting to approximately EUR2.5 million by engaging in illegal employment practices.

These criminals managed to operate under the radar by registering with well-known ride-hailing platforms such as Uber, Bolt, and Free Now using forged licenses. Investigators are raising concerns about the lack of data sharing between the municipal regulatory authority and these platforms, which could have quickly identified the fraudulent activities. A senior prosecutor has indicated that there has been no data exchange, which could have uncovered the scheme much earlier.

In a recent large-scale operation, authorities targeted 30 suspects involved in this fraud. During the raid, officials seized EUR850,900 in cash, three Rolex watches valued at around EUR30,000, various pieces of jewelry, and 90 vehicles--accounting for roughly 90% of the offenders' fleet. However, some vehicles were not confiscated due to their poor condition and lack of roadworthiness.

Many of the primary suspects, residing in the Rhein-Main area, have so far avoided detention and are believed to have withdrawn significant amounts of cash from the ride-hailing platforms to pay their drivers, primarily in cash. This practice enabled them to evade formal employment registration with social security systems. Furthermore, the value-added tax (19%) owed on passenger transport services was never reported.

During the raid, authorities discovered 14 counterfeit passenger transport licenses and found a considerable amount of cash stored in unusual places, including EUR238,000 hidden in a freezer.

In light of these developments, the CEO of Free Now has called for regular data exchanges between regulatory bodies and ride-hailing platforms to mitigate such fraudulent activities in the future. He emphasized that clear regulatory measures are essential to ensure market integrity and prevent illegal operations.