When you rent a car, does the company secretly track you?

If you care about your privacy or your pocketbook, ask whether your rental car has electronic tracking equipment and what it’s used for. The answers may surprise you -- if you can get them.

Since I last wrote about this issue in 2002, more rental cars have been fitted with such systems, which can instantly relay information on your car’s speed, route and position to the rental company. This is done by wireless devices and Global Positioning System (GPS) receivers that pinpoint location. Rental companies say they use the devices mainly to track stolen vehicles.

A flurry of lawsuits two years ago accused a Budget Rent a Car licensee in Tucson of using such a system to covertly track renters who took cars out of state and to fine them thousands of dollars. Earlier, another rental company in New Haven, Conn., allegedly tracked renters who drove faster than 79 mph and fined them.

State officials ordered the Connecticut company to stop the practice. The Tucson cases were settled last year, on undisclosed terms, and Budget says the outlet there has stopped tracking renters.

But the issue didn’t end there.

At least two renters say Payless Car Rental in the Bay Area used electronic tracking in the last few months to fine them for taking cars out of state.

One of them, Steve McCarney of Reston, Va., said he was “absolutely furious” when a Payless licensee that serves the Oakland airport added $786.37 in penalties onto his $155.52 four-day rental because he drove the car out of state to Ashland, Ore., for a wedding. He said the rental staff told him he was tracked electronically.

McCarney said he wasn’t told about the out-of-state rule, buried in the contract, he said, and that there was no notice of the tracking system.

Payless spokeswoman Margie Martin said the company did provide disclosure on these issues online and in contracts, and that its licensees had a right to keep tabs on their vehicles.

“It’s their property, and they need to know where it is at any given time,” she said.

Now a California assemblywoman has introduced a bill to crack down on electronic tracking in the industry.

“I believe the consumer has a right to know if they’re being tracked,” said Assemblywoman Ellen M. Corbett (D-San Leandro), sponsor of AB 2840. The bill, at the Travel section’s deadline Tuesday, was awaiting a hearing date in the judiciary committee, of which Corbett is chair.

Under the bill, a rental company would have to tell customers when they make their reservation whether the car has “electronic surveillance technology” and what it’s used for. Disclosure would be oral and written in at least 12-point type on the rental contract.

The company couldn’t share or store electronic tracking data unless the renter gave permission. And it couldn’t use the data to impose fines or surcharges.

Industry response to the bill so far is mixed.

“I don’t think rental companies object to disclosure as a concept,” said Michael LaPlaca, an attorney for the rental-car industry in Rockville, Md.

But he worries that renters will reject any vehicle with surveillance equipment, blocking its use “even for innocent purposes.”

Corbett’s bill may be unique, LaPlaca added. He said he knew of no federal law on the issue and only one other bill, pending in New York, which would forbid fines based on electronic data from rental cars.

It’s nearly impossible to determine how widespread the use of electronic surveillance is in the industry. Companies say either they don’t keep data or decline to disclose it, citing security.

“It’s been so overblown,” industry consultant Neil Abrams, president of Abrams Consulting Group in New York, said of the issue. “Most of the industry doesn’t have this [technology].”

But the practice seems to be growing.

AirIQ Inc., a Toronto company that derives most of its business from equipping U.S. rental cars with tracking systems, reported revenue was up 30% in the third quarter of 2003 from the previous year.

“Over the last couple of years, our use of tracking devices has grown,” said Richard Broome, spokesman for Hertz, an AirIQ customer.

Hertz activates the devices, which are mostly on luxury cars, only “if we suspect a vehicle has been stolen,” he said, and does not otherwise track renters’ speed or location. Renters aren’t told which cars have electronic tracking because the company wants to avoid tipping off thieves, he added.

Avis and Budget, in a joint statement, said they “unequivocally do not use satellite tracking devices” unless “a vehicle is reported stolen to law enforcement.”

But that policy is enforced only at rental outlets the two companies own and operate. Although Avis and Budget “strongly discourage” uses other than recovering stolen vehicles, independent franchisees, who run about a quarter of Avis’ outlets and nearly half of Budget’s, can use the tracking devices “in any lawful manner,” they said.

Which is exactly what worries privacy watchdogs: Almost any use could be lawful, given the lack of regulation.

In its online brochure “What can AirIQ do for your business?” the company touts an alert sent when a car crosses boundaries.

“The vehicle’s location, speed and the direction it is traveling are all plotted on a digitized map,” the brochure states. “With this information, you can enforce restricted areas and collect additional revenue.”

Each vehicle, it adds, “retains a history of location information” that can be retrieved later. AirIQ can also report “excessive speeding, enabling you to take measures to minimize these risks.”

A rental car, of course, doesn’t belong to you. It belongs to the company, which is entitled to keep track of it. Martin of Payless has a point there. But you also have a right to privacy.

Until regulators and the industry reconcile these two rights, car renters will need to take the initiative.

Jane Engle welcomes comments but can’t respond individually to letters and calls. Write Travel Insider, Los Angeles Times, 202 W. 1st St., L.A., CA 90012, or e-mail jane.engle@latimes.com.