Rental car customers in California no longer have to worry that car rental companies might use global positioning satellite systems to track their movements. Payless Car Rental franchisee Acceleron Corp. last month settled a lawsuit in California for levying a $1-per-mile surcharge on renters who traveled out of the state. The California Department of Justice said the company failed to notify renters that vehicles were equipped with global positioning satellite systems to track such violations.
"The technology gives the rental company the ability to set up a geographic electronic fence, such as you would with a dog you want to keep on your property," said Neil Abrams, president of Purchase, N.Y.-based Abrams Consulting Group Inc. "When the fence is triggered, the rental company knows it."
The court ruled that Acceleron, which owns two airport franchises in Oakland and San Francisco, did not reveal the amount of the penalty to customers, nor did it properly disclose the geographic restrictions.
"Acceleron laid a trap for its customers," California Department of Justice Attorney General Bill Lockyer said in a statement. While advertising unlimited mileage to customers, Acceleron "hit them with an unpleasant surprise when they returned their car: a bill with surcharges that sometimes reached $3,000. Those customers will get back their money under this settlement," Lockyer said.
Abrams said both matters were ones of disclosure, not deception. "The rental company has a right to impose this penalty. The court, however, did not find that the disclosure was sufficient. In this particular case, ignorance is a defense," he said.
"There was a Connecticut case a couple of years ago where speed was being tracked and customers were being charged if they exceeded a speed threshold," said Abrams, citing a 2002 case in which Acme Rent-a-Car used GPS systems for tracking purposes. As in the most recent case, the state stepped in to halt the practice.
While the California ruling initially affected 140 customers, it is applicable to those who filed complaints since Jan. 1, 2003, and until 90 days after the Nov. 9 ruling.
Furthermore, Lockyer noted that effective Jan. 1, 2005, California will bar the use of such tracking devices as GPS in rental cars for the purpose of monitoring customers. Car rental companies still can offer customers GPS devices to help navigate unfamiliar cities, such as those offered by Hertz and Avis
(BTN, Nov. 8, 2004). Yet, "the statute bars use of the devices to track renters' movements or to assess penalties arising from the renter's use of the vehicle," the California Justice Department said in a statement. The statute also allows car rental companies to use GPS systems to track stolen vehicles.
"This is not what I would say is a broad policy throughout the industry," Abrams said. "It is done by certain companies, in certain markets, for certain purposes. The major brands don't use such technology for the purposes of tracking unless the car is lost or stolen. This practice is more likely done by smaller operators or licensees."
Hertz only activates GPS tracking capability when a car is stolen. "Vehicle tracking is only used for emergency services," a spokesperson said. Larger car rental companies also do not restrict crossing state lines, Abrams said.