REDWOOD CITY, Calif. –- California Attorney General Bill Lockyear announced his office has reached a settlement with Acceleron Corp., the Bay Area-based Payless Car Rental licensee that used a fleet-tracking system to fine customers crossing state lines.

The lawsuit against Acceleron alleged that the company violated California'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.

The settlement requires Acceleron's owners, Andrew and Betty Wong, to reimburse hundreds of former customers for penalties charged. Acceleron had maintained it charged the penalties because crossing state lines violated the company's rental agreement.

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