Car Rental Company Will Pay Approximately $700,000

Car Rental Company

A California-based rental car company that allegedly used Global Positioning System satellite devices to charge customers for out-of-state travel was ordered today to pay restitution to those customers, Attorney General Bill Lockyer and San Mateo County District Attorney James Fox announced.

In a settlement stemming from a lawsuit alleging improper business practices, Fox Rent A Car Inc., said to be California’s largest independent car rental company, will pay approximately $700,000 in civil penalties and restitution to customers, according to the attorney general’s office.

Fox Rent A Car was sued jointly by the state attorney general and the San Mateo County district attorney for allegedly using GPS devices in its cars to track renters’ locations and for charging customers excessive penalties for driving outside of California, Nevada, and Arizona; for forcing renters to buy liability insurance; and for other practices such as charging for damage to a rental car months after the vehicle was returned.

Car Rental Company

According to Lockyer, the company advertised that rental charges covered unlimited mileage and had a policy prohibiting travel outside California, Nevada, and Arizona. The complaint alleged the company tracked customers using GPS devices and those who drove outside the three states were charged an extra $50, plus 35 cents per mile for every mile driven over 100 miles in a day, including those driven in California.

According to the complaint, those surcharges violated a law against the assessment of “liquidated damages penalties” because they had no connection to any damages that may have been caused by a driver breaking the travel restriction.

Lockyer also cited a 2005 state law, AB 2840, which restricts the use of electronic tracking devices in rental cars unless they are used for specific purposes such as finding lost or stolen vehicles.

According to the attorney for Fox Rent A Car, Mark Mittelman, using GPS in rental cars was an industry-wide practice that was discontinued by Fox Rent A Car in 2004, before the 2005 law went into effect and, Mittelman said, before most of the rest of the rental car industry.

Fox Rent A Car “never did monitor its customers’ travel,” Mittelman said. Only when renters left the three-state geographic area was the company advised by an independent GPS monitoring company that the vehicle left the area, he said.

According to Mittelman, the company’s use of GPS was never a case of privacy intrusion but was only to make sure their vehicles did not disappear.

The case was resolved, Mittelman said because it was costing the rental car company a lot of money and they merely wanted to continue their business.

“It was an economic settlement,” he said.

The complaint and the settlement were filed simultaneously this week, and a judgment was approved by San Mateo County Superior Court Judge Gerald Buchwald and filed this morning.

A settlement totaling $200,000 in civil penalties and an estimated $500,000 in restitution to customers was approved under the judgment, and in addition, Fox Rent A Car has been barred from requiring customers to buy unnecessary insurance, from using electronic tracking devices to gather information about the use of the vehicle, and from using that information to charge extra fees or penalties, according to the attorney general’s office.

Consumers who wish to file complaints within 90 days against Fox Rent A Car other than those related to geographical limitations or unnecessary liability insurance are also eligible to be considered for restitution, according to the district attorney’s office.

To file a complaint, consumers can contact the San Mateo County district attorney’s office at (650) 363-4651 or the attorney general’s office at http://www.ag.ca.gov/consumers/mailform.htm.

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