[News] Some Rental Cars are Keeping Tabs on the Drivers

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Some Rental Cars are Keeping Tabs on the Drivers

January 13, 2004
  By CHRISTOPHER ELLIOTT





Byungsoo Son's recent western trip was mostly for pleasure.
But the car rental bill he was hit with at the end is a
cautionary tale for the business travelers who make up the
bulk of the auto rental industry's customers.

Mr. Son, who manages a grocery store in Georgetown,
Ontario, and his wife, Junghyun, picked up a Ford Escort at
a Payless Car Rental outlet in November in San Francisco -
their son, Jaehwa, is an intern for a credit card company
there - and embarked on a 12-day road trip with him.

First, they drove to Las Vegas, 50 miles east of the
California state line, and from there 200 miles to the
Grand Canyon in Arizona, before circling back to Palm
Springs, Calif. They then traveled west to the coast to
drive on the scenic state Highway 1 back to Northern
California.

Mr. Son received a shock when he returned the car. The
$259.51 bill he expected had ballooned to $3,405.05 - most
of it a result of a $1-a-mile fee for each of the 2,874
miles driven. It turned out that by crossing the state
line, he had violated his contract with Payless.

"If we had known we couldn't drive the car outside
California, we wouldn't have rented it," Mr. Son said.

Penalties for taking a rental vehicle beyond state lines or
national borders are not new. But the way in which Mr.
Son's surcharge was applied was somewhat novel. The rental
company presented him with a map showing his exact route
outside California as relayed by a tracking device in his
car. Mr. Son said he was surprised to learn that his
movements were being tracked. A letter was included with
the bill. "Should you choose to dispute this amount," wrote
Umesh Pudasaini, the Payless branch manager, "we will
pursue all avenues" to collect full payment. Car rental
companies have come to rely on an emerging technology
called telematics - which combines satellite-based Global
Positioning System tracking, wireless communications and
vehicle monitoring systems - to keep tabs on their
vehicles. About a quarter of the rental cars in the United
States are equipped with tracking technology, analysts
estimate. The industry views telematics as a way to enforce
its contracts, but some customers regard it, at best, as a
means to make more money and, at worst, as an invasion of
privacy.

Neil Abrams, an auto rental consultant, said early uses of
G.P.S. technology in rental cars, like the Hertz NeverLost
system, were intended to help motorists find their way. But
recent efforts have quietly focused on catching renters who
drive out of state or break speed laws.

The car rental industry already has a reputation for high
gasoline-refill charges and airport use fees, among other
items, and business travelers are concerned that telematics
will offer yet another opportunity for companies to impose
additional charges.

Donna Williams, a former investment banker, is worried
about another potential drawback. "You don't always want
your car rental company knowing where you're going," said
Ms. Williams, the author of "The Business Travel Almanac''
(Que Publishing, 2004). "What if you're doing your due
diligence on a transaction, and you've rented a car with a
tracking device? If your rental company knows who you are,
which company you work for, and where you are, it could
threaten the whole deal. It could even be used as insider
trading information."

Mr. Abrams says it is not always easy to tell if a car is
being monitored, although the fine print of a rental
contract should disclose the fact. "It could be anything
from an antenna on your rental car to something that's
internal and can't be seen," he said. Some tracking
technologies simply relay a car's coordinates back to a
rental franchisee, though more sophisticated versions can
keep tabs on any damage to the vehicle and even disengage
the engine by remote control if the car is stolen or driven
out of the country.

"When you put a perfect stranger in a $30,000 vehicle, you
have to protect yourself," Mr. Abrams said.

The customers also need to be protected, said Mari Anne
Sullivan, president of the Association of Car and Truck
Rental Independents and Franchisees. "There are liability
issues when you take a car out of state, and the tracking
devices also help prevent theft," Ms. Sullivan said. "That
keeps rental costs down."

But Mr. Son contends profit also plays a part. He said he
made his itinerary before reserving the car and never hid
his plans from Payless. He also says the agent at the
rental counter neither asked him where he intended to go or
told him of the restrictions. Mr. Son admitted that he did
not read the contract.

"There were many customers waiting behind us, and I felt
rushed to sign the contract," he said.

If Mr. Son had taken the time to read the fine print, he
would have seen a disclosure in an addendum to his rental
contract warning that the vehicle might be equipped with a
tracking device and that driving outside California would
cost him $1 a mile or more.

Payless confirmed the restrictions in an e-mail message it
sent to the customer, but Mr. Son's son made the booking on
his behalf, so he did not see it.

Mr. Son appealed his bill to Payless and to the Acceleron
Corporation, the owner of the San Francisco Payless
franchise. In an internal memorandum to Mike Harley,
Payless's president and chief operating officer, Kathy
Johnson, the company vice president, reported that "the
client was informed of the geographical restrictions
throughout the reservation and rental process."

Ms. Johnson says the San Francisco franchisee has had
geographic restrictions on its cars "for a number of
years," and that it added tracking devices gradually to its
fleet in 2003.

Payless deferred to its franchisee for a decision on Mr.
Son's request. Mr. Pudasaini turned him down. "You violated
the signed rental agreement and jeopardized our company and
your family," he wrote in an e-mail message to Mr. Son.
"You planned this trip in advance but decided to conceal
your intent."

Jaehwa Son, who was present when the car was picked up and
returned, denied his father hid anything from Payless. "Why
would anyone even try to risk a $3,400 car rental bill by
concealing that kind of information?" he asked. "We just
didn't know about the rule."

Mr. Son also considers the tracking device an invasion of
his privacy. He is disputing his credit card charge and is
considering suing Payless, contending that, among other
things, it failed adequately to disclose the tracking
device and violated his right to privacy.

It would not be the first time a motorist has taken a car
rental company to court over a tracking device. In 2002, a
Budget Rent A Car franchisee in Tucson was sued by at least
four customers after they were billed $1 a mile for
crossing specified state lines, with the extra fees for two
of them totaling more than $7,000. The cases were settled
out of court, and the Budget franchisee no longer charges
$1 a mile for rentals taken beyond areas authorized by its
rental agreements.

Perhaps the most high-profile tracking case to date
involved Acme Rent-a-Car in New Haven, which imposed $150
fines on customers each time they drove more than 79 miles
an hour for two or more minutes. In one instance, a
customer was charged $450 for his driving.

In February 2002, the Department of Consumer Protection
ordered the company to stop fining its customers and to
refund the penalties, arguing that the tracking devices
were inadequately disclosed and the fines were excessive.

Readers are invited to send stories about business travel
experiences to businesstravel at nytimes.com.

http://www.nytimes.com/2004/01/13/business/13gps.html?ex=1075056393&ei=1&en=6b4f25d0f0b1f672

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