For over a year, amid much controversy, New Haven’s Acme Rent-A-Car used the Global Positioning System to track its customers’ speed. When they went too fast, Acme added $150 to the bill.
But after a lengthy department investigation, James Fleming, Connecticut’s consumer protection commissioner, put an end to Acme’s automatic speeding ticket policy, ordering the company to immediately stop charging the fee. Acme also must refund about $13,000 by May 20 to all customers who were previously fined.
“This is a landmark case for consumer privacy and for consumer rights,” Fleming said.
Acme lawyer Max Brunswick said the issue is being misrepresented as a question of privacy — and that the commissioner’s decision will likely cost money and lives.
“People look at it as an invasion of privacy,” he said. “But the system’s like a smoke detector. It doesn’t go off unless something happens. But when it does go off, it’s only because people are speeding.”
Before the decision, if a customer drove faster than 79 miles per hour for two minutes straight, the GPS system in the car notified Acme, which charged $150 to the customer’s debit or credit card. But an independent hearing officer estimated that each speeding occurrence cost Acme only 37 cents, making the company’s charge of $150 disproportionate — a violation of the Connecticut Unfair Trade Practices Act, Fleming said.
Brunswick disputed the 37-cent estimate, saying that the wear and tear on the car was not taken into account.
“In their opinion, Acme suffers no damage,” Brunswick said. “But the mere act of speeding cuts the life of a car in half because you put strain on virtually all of its systems.”
He said Acme is planning to appeal the decision in state court and will ask a judge to delay Fleming’s cease-and-desist order.
But that appeal will not go very far if a new bill Fleming has proposed gets through the state Legislature. The proposed law would require rental car companies to disclose whether they use GPS systems in their cars, and it would ban any use of such systems to charge customers for speeding.
Fleming said it is not a rental car company’s job to enforce the speed limit.
In a statement issued after the decision, state Attorney General Richard Blumenthal said he supported the ruling.
“This ruling strikes a solid victory for consumer privacy, full disclosure and fairness,” he said. “Consumers should not be secretly tracked and fined without fair warning.”
But Brunswick said the ruling will mean higher prices for consumers. The main reason Acme tried to collect the fees was to keep insurance rates down, so that the company could offer a competitive price. But that might no longer be possible, he said.
“When you’re a small rental car company competing with someone like Hertz, the only thing you can really compete on is price,” Brunswick said. “But now there might be a four or five hundred thousand dollar a year increase in our insurance costs.”
According to Fleming’s decision, Acme also failed to state its policy clearly in its contract with customers.
The issue of clarity hinged mostly on Acme’s use of the term GPS in its contract, which it did not define. Fleming said the average consumer is not aware of what the acronym stands for or what “Global Positioning System” means.
Since then, Acme has rewritten its contract to comply with the law’s requirements and has refunded all of its clients who were charged under the old contracts, Brunswick said.