In 2001, a San Diego, California Superior Court ruling found the common practice of cities paying red light camera vendors for each ticket they issued undermined the integrity of the system. In response, the state legislature mandated that all new photo enforcement contracts must be flat rate, outlawing any payment method, "based on the number of citations generated, or as a percentage of the revenue generated."

At least fourteen cities have entered into contracts with camera vendors Redflex, Nestor and others that violate this law. San Mateo, for example, has agreed to a cost neutrality provision that states, "Redflex agrees to absorb, eliminate, or reimburse Customer for the excess expense thereby covering the cost for system operation so that the Customer achieves cost neutrality in accordance with the representation that the system(s) shall pay for themselves."

In effect, this provision means the city will pay more or less money to Redflex based upon the number of citations issued. The impact is not theoretical. Highwayrobbery.net obtained documents which show that Redflex cut twenty percent off of the bill for the city of San Mateo in August 2005 (see invoice), giving the vendor a direct financial incentive to boost the number of violations. This is the practice that caused Judge Ronald L. Styn to write, "The potential conflict created by a contingent method of compensation further undermines the trustworthiness of the evidence which is used to prosecute red light violations."

Other cities that use the new contingent method of compensation include Capitola, Davis, Gardena, Laguna Woods, Loma Linda, Los Alamitos, Marysville, Modesto, Murrieta, Paramount, Rocklin, San Leandro and Union City. The contract between vendor ACS and Washington, DC advertised as "flat rate" was also found to be not flat in February.