What would you do? I am sure that has happened before... Is the player banned? Seems risky for the lender and the user. What happens if it is lost (die in lava etc)? Asking for a friend. In all seriousness, I want to know before I rent one. If I did, and this occurred, I'd do my best to get a new one.
Most star tools rental agreements have clauses that give you a certain amount of time to replace the tool. If you can't replace it in the period given or your agreement has no such clause you would be banned for scamming. Personally this is why I wouldn't suggest renting a tool if you don't have the features to protect it. After you consider the rental fee you're not profiting a whole lot (depending on your rental period I guess) and taking on ~1mil in liability. Not worth.
Completely agree. The only time I rented a star tool was a melon sword, for just an hour, and only because I wanted to test it in order to decide whether it would have been a good investment to buy one or not. (I concluded it wasn't worth the price, btw XD ). No, wait: @Imabankthing lent me his star pick once for a day or two for free, as I wasn't making a profit out of it (I needed it to clear an area in rising world, so the only reasonable risk to lose it was by exhaustion, and I was extremely cautious at the time).