Thousands of customers could have money coming back from a car rental company accused of illegally requiring drivers to buy liability insurance and using global positioning devices to levy arbitrary fees, according to a settlement filed Thursday.
Fox Rent A Car — based in Phoenix but with offices throughout California, including at the San Francisco and Oakland airports — has agreed to pay an estimated $690,000 to customers and investigators in a settlement with the state Attorney General’s Office and the San Mateo County District Attorney’s Office.
“The [settlement] permanently prohibits Fox from requiring its customers to buy unnecessary insurance,” said Deputy Attorney General Seth E. Mermin. It also bars the company from using satellite tracking devices to collect information about a consumer’s use of a rental vehicle, then using the devices to impose surcharges and fines, officials said. The company is also accused of charging customers for damage done to the vehicle long after the rental was over.
The alleged behavior likely goes back years and affects thousands of the company’s customers, officials said. Under the agreement, customers who used the company between March 1, 2004 to Aug. 31, 2005 may be eligible to receive money back. A total of $350,000 in restitution is to be paid to customers who were illegally required to purchase liability insurance, if they couldn’t prove they had some at the time of the rental. Another $89,000 is to be paid to customers who were forced to pay fees when their cars were tracked outside the tri-state area of California, Nevada and Arizona, Mermin said.
Fox will also pay the state Attorney General’s Office and District Attorney’s Office a total of $250,000 in reimbursement costs, officials said.
Tracking the vehicles violates the first section of the California Constitution, which says citizens have a right to expect privacy, Mermin said. The case came to investigators’ attention following “numerous” complaints to government agencies and the Better Business Bureau, Mermin said.
The company denies any wrongdoing, saying its internal records show customer complaints of less than 1 percent. “That was something that was a free choice of the customers to purchase,” said Mark Mittelman, attorney for Fox, referring to the liability insurance.
In addition, Fox didn’t use global positioning to track customers, but paid an independent firm to send Fox representative an e-mail if a car crossed out of the tri-state area to prevent thefts, Mittelman said. “Fox didn’t watch [customers’] vacation trips or the hotels or the cities they went to.”
Following notification of the investigation, Fox changed its practices, officials said.