Hertz Global Holdings, the parent company of car rental brands Hertz, Dollar, and Thrifty, announced this week it would pay $168 million to settle more than 95 percent of false theft claims. These claims were initiated by customers who stated that they were intentionally detained or arrested by the police after the company reported their rental vehicle stolen.
At the heart of the matter is a lawsuit based on 230 bogus arrest cases. Incidents occurred when Hertz reported rental vehicles stolen by people who were weeks or months late in returning their rental vehicles. These vehicles are eventually returned by the customer or restored and then leased out again. In some cases, the next person who rented the vehicle was arrested or detained because the vehicle was still reported stolen.
False arrest claims have been around since 2014 and have been reported as recently as this year. Last spring Bloomberg TV interviewed Hertz CEO Stephen Scherr, who admitted that people have been wrongly arrested after renting cars that were reported stolen.
“What’s at play here is we have a car that was stolen, or suspected to be stolen. We file a police report; when the car is found, the report is cancelled. And, unfortunately, under certain circumstances, when the car goes out again, it isn’t actually cancelled, and customers are accused,” Scherr said.
In a statement about the settlement, Hertz said it would recover a “significant” portion of the settlement amount from its insurance company. The company also does not expect the settlement of these claims to have a material financial impact this year or in 2023. In October, Hertz reported a 12 percent increase in revenue for the third quarter amid strong demand for rental cars. The increase in demand was a reversal of fortunes for Hertz, which declared bankruptcy in May 2020 with more than $17 billion in debt.
