San Francisco-based HiGear, a peer-to-peer car-sharing service for luxury vehicles, has been acquired. The news follows the company’s decision to shut down operations last month, after a criminal ring targeted HiGear, resulting in multiple incidents of theft involving its members’ cars. The criminals stole four cars totaling $400,000 by using stolen identities to bypass HiGear’s background checks.
Today, the company is announcing its assets have been sold to another peer-to-peer car-sharing marketplace known as Rent2Buy. Terms of the deal were not disclosed.
Rent2Buy is the car-sharing service started by Automoti founder Moti Kahana and e-commerce executive Todd Daum, formerly of Overture, Yahoo and TrueCar. Automoti, an online rent-to-buy service was later acquired by Hertz in 2009. Currently, Rent2Buy’s advisors include current and past executives from top rent-a-car companies, including National, Hertz, Budget and Alamo.
Unlike HiGear, which had previously specialized in the temporary rentals of luxury vehicles by clients, Rent2Buy, as the name implies, also facilitates the purchase of the cars in its inventory. Car owners, both individuals and dealers, are able to generate rental income on vehicles while waiting to sell. Meanwhile, renters have the opportunity to get to know the cars they’re interested in purchasing by driving them for extended periods of time.
With the acquisition of HiGear, Rent2Buy will be able to provide additional access to consumers and inventory in the San Francisco and Los Angeles markets. Daum tells us that Rent2Buy purchased both the HiGear sharing platform as well as the sharing inventory and customer database.
Rent2Buy had been bound by a non-compete with Hertz since the sale of Automoti in 2009, and have only recently been able to re-focus on the rent-to-buy space. “We had been exploring other potential verticals such as real estate, where we had grown to 1.7 million listings,” says Daum. “We are now focusing only on autos and have interest from dealers and rent-a-car companies to partner with us on this new initiative. The HiGear platform will help us quickly fulfill on this demand,” he adds.
Starting on February 28th, HiGear members will be able to use the high-end car-sharing service once again, the company reports. Accounts are being moved over automatically, but all customers are being contacted so they’ll have the opportunity to opt-out, if desired. So far, Daum says the retention rate is close to 100 percent.
HiGear’s website now redirects to Rent2Buy’s domain (where it appears that the hot car + hot model photos popular on HiGear have also re-emerged). Going forward, Rent2Buy will establish a new domain (HiGear.Rent2Buy.com) which will be home to the company’s “VIP” program.
The previous shutdown of HiGear is now being referred to by both companies not as the end of operations, but merely a “pause” to ensure that “appropriate consumer protection tools were in place.” For what it’s worth, HiGear did have protections in place at the time of the thefts, it’s just that when criminals steal identities, things like background checks and driving record checks can be easily thwarted.
According to Rent2Buy’s site, there are extra protections now in place for vehicles over $30,000, which would include all of HiGear’s inventory, of course. These luxury cars in the Rent2Buy “VIP Club” will only be rented to those who pass secondary trust and safety screening processes which involve the renters being contacted by the company itself, as well as a $1,000 deposit on vehicles.
“We have brought Jeff Frimmersdorf on board to focus on this area,” explains Daum. “He was head of eBay Motors ‘Trust & Safety’ for seven years and has fantastic experience dealing with these issues.”
The initial efforts are focused on improving identity validation by launching the above-mentioned second tier screening process. Rent2Buy is also working with partners such as MicroBilt to deploy the new solution.
But the issues that occurred with HiGear are indicative of the potential for abuse in these new types of peer-to-peer environments. According to HiGear investor (now Rent2Buy investor) Dave McClure, there are “a lot more opportunities to figure out the collaborative consumption market,” he says, and specifically the process of rating its individual users. The traditional vetting process may not be enough.
Perhaps what we need is something like a modern version of eBay’s seller rating system, except one not limited to a single website? This system could take into account our online profiles, social media presences and more. A system like this wouldn’t just rank “influence” as Klout does, but could rank a history of our transactions across the collaborative consumption space, whether we’re ride-sharing, renting, or vacationing on Airbnb.
In addition to McClure’s 500 Startups, HiGear’s other investors, Battery Ventures and BV Capital, are also now investors in Rent2Buy following the acquisition.