Saving Money, Losing Privacy, Tracking Your Every Move

By Frank Whalen

In the wonderful world of total surveillance, another carrot is being dangled before consumers: The promise of cheaper car insurance rates with a new option called Pay-As-You-Drive, or PAYD. The idea is that drivers will only be charged premiums based on usage. According to State  Farm Insurance: “Premiums could be set, along with other rating factors, by ranges of miles driven, by actual miles driven, or sometimes by either hours or miles driven. In theory, it helps match price to risk: the fewer miles driven, the greater the savings.”

It all sounds like a good thing, but the carrot comes with a stick: State Farm adds that their program utilizes a Global Positioning System (GPS) device. In some cases, they can even monitor driving behavior such as braking and acceleration so insurance companies can set rates based on these factors.


According to a State Farm representative, PAYD program rates are initially calculated based on the length of commute between workplace and home, existing driving records, as well as age. When asked for details on the GPS component, an agent told this reporter, “I don’t know much about that, as it is not yet available in every state.” Another agent was surprised to hear of the GPS aspect, calling it “Big Brother stuff.”

The potential for abuse is obvious. While enticing customers with the promise of cheaper rates, a private company could have access to information that far exceeds the scope of insurance premium pricing.

This information could also be misinterpreted. In June 2001, CNET News reported the story of James Turner, who was fined $450 by Acme Rent-a-Car after speeding in a rental vehicle. GPS enabled the company to determine supposed infractions. “When Turner contested the charges, Acme was able to point out on a map exactly where he exceeded the company’s threshold speed of 79 mph.” Finally, it won a court ruling so that Turner would have the amount deducted from his debit card.

An insurance company would also be privy to any information that could be used to unjustifiably raise rates. The burden of oversight would fall upon consumers. Obviously, the difficulty of proving that a certain maneuver did not constitute reckless behavior at a certain date, time and location seems almost impossible. Finally, an insurance company would be able to track everywhere a driver goes, effectively removing Americans’ constitutional right to privacy.

Other concerns would be the protection of a customer’s personal information, both from hackers and from law enforcement agencies invoking aspects of the PATRIOT Act. In 2007, a Justice Department audit of the FBI’s misuse of national security letters unequivocally declared: “Agents demand personal and business information about individuals—such as financial, phone, and Internet records—without court orders.”They added: “As many as 22 percent of national security letters were not recorded, and the letters were issued without proper authority, cited incorrect statutes or obtained information they weren’t supposed to.”

The Environmental Defense Fund lauds this program, writing: “Mileage or usage-based insurance provides a strong incentive to drive less,  helping to ease congestion and reduce tailpipe emissions.” Citing a study, they report that in embracing such an option: “Total U.S. carbon dioxide emissions would go down by 2 percent and oil consumption by 4 percent, helping to stabilize our climate and reducing America’s dependence on foreign oil.”

On Oct. 10, 2008 the UK Commission for Integrated Transport “proposed a nationwide blanket of speed cameras as a means of fighting global warming.” However, trials showed that it would be “impossible to drive on any primary road in Britain without being tracked and subjected to an instant fine for exceeding the posted speed limit.”

As many examples clearly show, programs said to be for the public good or of a personal benefit rarely live up to their magnanimous  promises. More often than not, there is a tidy profit involved for companies and governments, and through choosing to participate, citizens allow for an ominous expansion of surveillance. Like many programs before it, Pay-As-You-Drive fits this model perfectly.