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For years, rental car company Hertz has falsely accused hundreds of innocent customers of stealing its vehicles — charges that, for some customers, have resulted in arrests, felony charges and jail time.
Now the company will pay $168 million to settle those claims, Hertz announced Monday.
In total, the settlement will cover 364 people falsely accused of auto theft. In a statement, the company said that number represents “more than 95%” of those claims.
“As I have said since joining Hertz earlier this year, my intention is to lead a company that puts the customer first. In resolving these complaints, we are sticking to that goal,” said the CEO Stephen Scherr in a statement announcing the settlement.
Hertz Global Holdings, which also includes car rental companies Thrifty and Dollar, filed for bankruptcy in 2020. Numerous claims have emerged in those proceedings.
Of the company’s 25 million rental transactions, 0.014% are reported stolen each year, or about 3,500, the company said.
But some of these reports turned out to be false. In lawsuits and in press reports, stories of false charges revealed flaws in Hertz’s rental records and theft policies that led to the errors.
What customers say happened to them
A Hertz customer was driving her rental car in Chicago when she got a flat tire, and she called Hertz to have the car towed, court records show. Months later, she was arrested for wearing a seat belt incorrectly when police informed her that they had a warrant for her arrest; she was jailed for more than 30 days, she said in a lawsuit.
Another customer in Florida extended their Hertz rental four times — but the car was reported stolen before the extension period ended despite text communications with a Hertz employee confirming their intention to return it, court records show. She was jailed for 37 days, separated from her two children and missed her nursing degree, the lawsuit said.
And a Mississippi man spent more than 6 months in jail after Hertz reported his rental car stolen; he returned it and paid for it in full, but the company did not notify prosecutors, he said in his lawsuit. He missed a court date and was incarcerated for months, the lawsuit says.
Several clients have reported in lawsuits that they have lost employment opportunities due to pending felony charges. Others said they were arrested at gunpoint.
Hertz initially fought in bankruptcy court to keep the allegations sealed. After a CBS News report made some of the incidents public, Hertz responded that the vehicles were only reported stolen after “exhaustive attempts to reach the customer.”
Many Hertz cases involved customers who called to extend their lease, but the extensions were not properly reflected in Hertz’s computer systems. Other cases involved Hertz re-renting cars that had already been reported as stolen without voiding police reports, causing unsuspecting customers to be arrested by police. At other times, stolen cars were accidentally matched to the wrong customer, resulting in an arrest warrant for someone who was entirely out of state.
“As a result of these systematic and systematic mass reports, without verification or investigation, many innocent clients were unjustly detained, arrested, imprisoned, prosecuted and had their lives destroyed,” a lawsuit alleged.
Hertz emerged from bankruptcy last year, but the false accusation cases had yet to be resolved.
In April, shortly after taking over as CEO of Hertz, Scherr said “rectifying this situation” was a priority. “It’s unfortunate that only one customer was caught in the middle of what happened,” he said in an interview with Bloomberg TV. “I’m pretty confident that we’ll reach an agreement to do some good for those who have been hurt and that we’ll put that behind us.”
A group of plaintiffs filed a new lawsuit in Delaware Superior Court in September; this matter is now settled. A lawyer representing the plaintiffs did not respond to a request for comment.
In its statement, Hertz said it would pay the $168 million by the end of the year.