Register Log in


Court rules against car rental company using GPS

Is it good business for car rental agencies to use GPS to track their car …

The Connecticut Supreme Court has ruled that an "excessive wear and tear" penalty charged by a car rental company is illegal. A number of people who had rented cars from Acme Auto were charged US$150 for the excessive wear and tear that their rental cars suffered while the renters drove them over the speed limit. Some renters were dinged numerous times on the same rental.

Acme's setup was clever. They equipped their vehicles with GPS systems and then set them up to notify the company each time one of the vehicles was driven at least 80mph for more than two minutes at a time. Each time, the company charged the customer's credit card. Buried deep in the fine print of most of the rental contracts was a clause stating that "vehicles driven in excess of the posted speed limit will be charged $150 per occurrence" because of the supposed damage it caused the car. However, there was no mention of GPS or other means by which vehicle speed would be monitored.

Acme's practice dates back to October 2000, and more than one ex-customer was hit with multiple charges after being caught speeding by the GPS. In unanimously upholding the decision of the Connecticut Department of Consumer Protection, the state Supreme Court found that the fees were unreasonable, and that while the customers may have indeed been guilty of speeding, the rental company had no business profiting from it.

"The $150 collected by [American Rental] was more than 400 times the potential damage incurred," Justice David M. Borden wrote. "Using the [consumer department] hearing officer's calculation, a customer would have to travel more than 1,070 miles at high speeds, without decelerating below 80 miles per hour, to cause $150 of excess wear on the vehicle."

It looks as though the court did not find it necessary to address a couple of the major issues in the case in order to decide against Acme Auto. Since the fines were deemed excessive, the justices never looked at the adequacy of the contract language. And they also did not look at the question of companies' use of GPS to track the actions of their customers.

That said, the case brings to the surface an issue that has been lurking ever since auto makers began putting "little black boxes" inside of new vehicles. Advanced Automatic Crash Notification systems use sensors to record data from different parts of a vehicle, which could be read in the case of an accident to determine whether the driver was speeding. GPS is another matter. Some insurance companies will give you an anti-theft discount if you have such a device installed. However, the possibility exists that insurance companies could use GPS data to figure out your driving habits such as how far you drive, how often you use your car, and how fast you travel to set their rates.

To some people, this seems like an invasion of privacy, but for others, the chance to get more refined data on a driver's habits makes it fair game.

Expand full story

You must to comment.

Need to register for a new account?

If you don't have an account yet it's free and easy.