New York Times
January 13, 2004

Some Rental Cars Are Keeping Tabs on the Drivers
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.

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