California AG Reports Rental Car Firm Ticketed for Variety of Violations

November 12, 2004

California Attorney General Bill Lockyer announced the settlement of a consumer protection lawsuit against Acceleron Corp. that alleged the Bay Area franchisee of Payless car rental levied surprise surcharges on customers who traveled outside California and failed to notify renters their vehicles were equipped with global positioning systems (GPS) to track their movements.

“Acceleron laid a trap for its customers,” said Lockyer. “Vacationers counted on the advertised unlimited mileage. But if they took a side trip outside California to Las Vegas or the Grand Canyon, Acceleron hit them with an unpleasant surprise when they returned their car: a bill with surcharges that sometimes reached $3,000. Those customers will get back their money under this settlement.”

Lockyer and San Mateo County District Attorney James Fox filed the settlement and the complaint The settlement was approved by San Mateo County Superior Court Judge George Miram. The defendants include: Acceleron Corp. (Acceleron); Andrew Wong, president and treasurer of Acceleron; and Betty Y. Wong, the firm’s vice-president and secretary.

The settlement requires the defendants to reimburse hundreds of former customers slapped with surcharges for supposedly violating Acceleron’s poorly-disclosed restriction on traveling outside California and certain parts of Nevada. Additionally, former customers will receive restitution for other improper charges. Customers eligible for restitution include all renters surcharged between Jan. 1, 2003 and today for allegedly violating Acceleron’s out-of-state driving restrictions.

Eligible customers also include renters who between Jan. 1, 2003 and today submitted to the following agencies a valid complaint about other unlawful charges levied by Acceleron’s Payless offices at the San Francisco or Oakland airports: the Better Business Bureaus in San Mateo or Alameda counties; the Payless corporate office in Florida; the California Attorney General’s Office; or the San Mateo County District Attorney’s Office. In addition, any consumer who submits a complaint about Acceleron’s Payless offices at the San Francisco or Oakland airports within 90 days after today is eligible to be considered for restitution.

The settlement also requires the defendants to pay $175,000 in civil penalties and a combined $75,000 in cost reimbursement to the Attorney General’s Office and San Mateo County District Attorney’s Office.

The complaint alleged Acceleron’s Payless offices at the two Bay Area airports repeatedly violated the state’s Unfair Competition Law by penalizing renters who drove outside California and certain parts of Nevada. Customers who violated this restriction were charged $1 for every mile driven – including miles driven within California – rather than being afforded the advertised unlimited mileage.

Acceleron failed to reveal to customers the amount of the penalty, and inadequately disclosed the geographic restrictions. In fact, according to the complaint, Acceleron’s employees gave some renters directions to Oregon. Additionally, the company did almost nothing to let consumers know their rental cars were equipped with GPS devices to track their movements.

Acceleron committed other unfair business practices, the complaint alleged, including: violating the Civil Code by forcing customers to purchase liability insurance as a condition of rental; providing customers with unsafe vehicles, and refusing to reimburse customers who paid to fix brakes or tires; forcing renters to pay more for an “upgrade” when the type of car they had reserved was not available, in violation of the Civil Code; failing to let renters from Northern California know in advance they would not be eligible for the advertised “unlimited mileage”; and charging renters for “damage” to vehicles months after the vehicles had been returned with no damages cited.

The settlement permanently prohibits the defendants from using electronic tracking devices to collect information about a consumer’s use of a rental vehicle, and from using information collected through such devices to impose surcharges, fines or penalties. The settlement also bars Acceleron from coercing customers into buying liability insurance or paying for unwanted upgrades, and requires the firm to ensure all of its rental vehicles meet California safety requirements.

Lockyer noted the use of GPS and other electronic tracking devices in rental cars will be restricted under a new law, AB 2840, which takes effect Jan. 1, 2005. Supported by Lockyer, AB 2840 (Corbett) permits the devices to be used only for specific purposes, such as tracking down lost or stolen vehicles. The statute bars use of the devices to track renters’ movements or to assess penalties arising from the renter’s use of the vehicle.

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