Hertz will pay $168 million to customers it falsely accused of stealing its cars

For years, the rental car company Hertz falsely accused hundreds of innocent customers of stealing its vehicles — accusations that, for some customers, 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 car theft. In a statement, the company said the number represents "more than 95%" of such 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 claims, we are holding ourselves to that objective," said CEO Stephen Scherr in a statement announcing the settlement.

Hertz Global Holdings, which also includes rental car companies Thrifty and Dollar, filed for bankruptcy in 2020. Many of the claims emerged as part of those proceedings.

Of the company's 25 million rental transactions, 0.014% are reported stolen each year, or about 3,500, the company has said.

But some of those reports have been proven to be false. In lawsuits and in press reports, stories of false accusations revealed lapses in Hertz's rental records and theft policies that led to the errors.

What customers say happened to them

One 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 state. Months later, she was pulled over for wearing a seatbelt incorrectly when police informed her she had a warrant for her arrest; she was jailed for more than 30 days, she said in a lawsuit.

Another customer in Florida extended her Hertz rental four times — but the car was reported stolen before the end of the extension period in spite of text message communications with a Hertz employee confirming her plans to return it, court records show. She was jailed for 37 days, separated from her two children and missing her nursing school graduation, the suit said.

And a Mississippi man spent more than 6 months in jail after Hertz reported his rental car stolen; he had returned it and paid in full, but the company had failed to inform prosecutors, he said in his suit. He missed a hearing date and was incarcerated for months, the suit states.

Several customers reported in lawsuits that they lost employment opportunities over pending felony charges. Others said they were arrested at gunpoint.

Hertz had initially fought in bankruptcy court to keep the allegations under seal. After a report by CBS News made some incidents public, Hertz responded that vehicles were only reported stolen after "exhaustive attempts to reach the customer."

Many of the Hertz cases involved customers who had called to extend their rental agreement, but the extensions were not properly reflected in Hertz's computer systems. Other cases involved Hertz re-renting cars that had previously been reported as stolen without rescinding the police reports, causing unsuspecting customers to be pulled over by police. At other times, stolen cars were accidentally associated with the wrong customer, resulting in an arrest warrant for someone who was out of state entirely.

"As a result of this routine and systemic mass reporting, without verification or investigation, many innocent customers have been wrongfully detained, arrested, thrown in prison, prosecuted, and had their lives destroyed," one lawsuit alleged.

Hertz emerged from bankruptcy last year, but the false accusation cases had yet to be resolved.

In April, shortly after he had taken over as Hertz's CEO, Scherr said that "rectifying this situation" was a priority. "It's unfortunate that even one customer was caught in the middle of what went on," he said in an interview with Bloomberg TV. "I'm pretty confident that we will reach agreement to do right by those that were harmed and put that behind us."

A group of plaintiffs filed a new lawsuit in Delaware Superior Court in September; that case 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.

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