Hertz Global Holdings, the parent company of car rental brands Hertz, Dollar and Thrifty, announced this week that it will pay $168 million to resolve more than 95% of wrongful theft claims. These claims have been made by customers who say they were mistakenly detained or arrested by police after the company reported their rental vehicles stolen.
At the heart of the problem is a trial based on 230 cases of arbitrary arrests. The incidents occurred when Hertz reported rental vehicles stolen by people who were weeks or months late returning their rental vehicles. These vehicles were eventually returned by the customer or recovered and then re-rented. In some cases, the next person who rented the vehicle was arrested or detained because the vehicle was still reported stolen.
The false arrest allegations date back to 2014 and were reported as recently as this year. Last spring, Bloomberg TV interviewed Hertz CEO Stephen Scherr, who admitted people had been falsely arrested after renting cars that were allegedly stolen.
“What happened here was that we had stolen or allegedly stolen cars. We filed a police report; when this car was found, the report was quashed. And, unfortunately, in certain circumstances , when this car came out again, in fact, it was not canceled and so the customer was charged,” Scherr said.
In a statement about the settlement, Hertz said it would recover a “significant” portion of the settlement amount from its insurers. The company also does not expect the resolution of these claims to have a material impact on its finances this year or in 2023. In October, Hertz announced a 12% increase in revenue for the third quarter in a context of strong demand for rental cars. This increase in demand is a reversal of fortune for Hertz, which declared bankruptcy in May 2020 with more than $17 billion in debt.
