Rental Cancellation Policies

I think there is no way to institute a policy at all. It will either
be so toothless as to make it trivial for an abuser to circumvent, or
it will inevitably catch people cancelling for legitimate reasons.
Here are a few:

Crosswinds too much for the individual (I actually flew with a private
pilot who had NEVER experienced more than 5 kts of crosswind component)
and, in the general case, weather that is too much for that individual
pilot but would be no big deal for a more capable pilot.

Weather crappy at destination. Many people rent airplanes to go
places. It might be just fine where you are, but 200 miles away where
the renter is going the weather is (or is forecast to be) beyond his
capabilities.

Personal illness, lack of sleep, etc. Impossible to disprove.

Then you have another problem. If you have policies that charge the
pilot for a cancellation, there will be an expectation of compensation
if the airplane is not ready and airworthy. In general, unless you are
prepared to pay cancellation fees if the plane isn't ready, don't
expect to collect any if the pilot isn't ready.

The real solution is that when you identify someone who abuses the
system, don't rent to him anymore. It's really that simple.

Michael