How car rental companies pass on cost of traffic tickets
Why so significant? Travelers who rent cars and blow a red light will now automatically have the cost of that traffic ticket -- plus a $30 processing fee -- billed to the credit card they provided to the rental-car company, MSN Money reports, giving ATS a quick boost in revenue. If you think you can avoid this "auto ticket payment" by switching rental companies, you might be out of luck, since major players such as Hertz, Avis and Budget all have partnerships with ATS.
Privacy experts say this arrangement isn't fair to renters. Ordinarily, if you get a traffic ticket, you have the chance to go to court and plead your case to get the fine reduced or waived, With this electronic system, pleading "not guilty" isn't an option. The cost can be steep, too: The article says people have been slapped with fines of up to $1,000. The $30 processing fee rankles, too, although ATS says it's necessary to cover its expenses.
"This is a very hot subject," says Neil Abrams, president of Abrams Consulting Group, a company that focuses on the rental car industry. "From an industry perspective, unpaid parking and other traffic violations is a very important and serious issue for rental operators. Unpaid violations could mount up to tens of millions of dollars per year, industrywide." Previously, rental car companies had to simply pay these fines, then hope they could track down the customer who was driving the car when the ticket was issued. It was an administrative headache and cost the rental companies a lot of money.
Abrams acknowledges that renters have a real issue with ATS's profitable involvement. "Here you have the company that's judge and jury also making money processing violations, so it's a double-dip kind of perception," he told WalletPop during a phone interview. But he repeats the observation that rental car companies need some way to recoup the millions they have to pay to municipalities for customers' traffic infractions.
The bottom line: Read the fine print in your rental car contract, and ask at the counter if you don't see any reference to how traffic violations are handled. Or just stop at red lights and avoid the whole hassle.