Suing Hertz

[George K]

I can't find it at the moment, but I think it was on the old platform where @jon-nyc posted a story about some guy who rented a car from Hertz and then got tagged because the car was reported as stolen. I don't know how the situation got resolved, but his life was hell for a while.

So, there's some backstory here:

Customers Are Suing Hertz for $529.7 Million

According to their filings, for years Hertz has falsely reported that its cars were stolen as part of its regular business practice, "ensnaring its customers in accusations of car theft, throwing them in jail on felony charges, prosecuting them, burdening them with criminal records that impact their livelihoods, and separating them from their family and loved ones."
Why would Hertz claim that its cars were stolen when legitimate renters were driving them? Believe it or not, the filing claims this is a cost-cutting measure. In some cases, the company simply misplaces a car or a rental contract and doesn't know where the car is. Rather than upgrade its malfunctioning inventory systems or conduct its own investigation when cars are unaccounted for, Hertz simply reports these cars as stolen, the filing claims. The plaintiffs say the company is "effectively using the police, criminal justice system, and taxpayers to subsidize inventory control for a private corporation." The unfortunate renters who happen to be driving those cars are collateral damage.
In other cases, renters extend their contracts, but the temporary hold Hertz places on their credit or debit cards fails to go through. This usually happens because they either don't have enough money in their checking accounts or don't have enough available credit on their credit cards at the time the hold is placed. In many cases, customers will still pay for the rental, either because funds will be available by the time the car is returned and their card is actually charged, or because they use a different payment source. When a hold fails to go through, the suit alleges, Hertz routinely puts the due date back to before the extension was granted, making the car badly overdue.
Incredibly, the filing alleges and customers reported to CBS News, Hertz representatives have told customers that the charge went through and the rental extension was authorized--but then the company filed a theft report anyway. John Ayoub, a particularly unfortunate renter, has a recording of a Hertz employee extending the rental for him, saying "Yup, you're all set." Not long afterward, he was arrested and spent four months in jail for supposedly stealing the car. Meanwhile, his card was charged. In these cases, too, plaintiffs argue, Hertz is saving itself both money and work by handing off the problem to law enforcement rather than dealing with it directly.

[Jolly]

Didn't Hertz go bankrupt?

[George K]

@jolly said in Suing Hertz:

Didn't Hertz go bankrupt?

Yes they did.

[Jolly]

Does that make them judgement -proof?

[George K]

Hertz Car-Rental Company to Pay $168 Million in False-Arrest Settlements

Renting a car should be an easy task, save for the busy airport lines, but it's become a more costly and involved process. Making sure the tank is full and the interior is clean is part of the agreement between the renter and driver—an agreement that is generally fair for both parties, as long as you don't have to pay an inflated refueling fee. What most consumers don't expect out of their rental, however, is being arrested because of claims that the car was stolen.

Unfortunately, that's exactly what has happened to hundreds of Hertz customers since 2015. According to lawsuits filed across the nation, customers were held at gunpoint, arrested, and even held in jail for days as a result of Hertz reporting rental models as stolen. Now, Hertz says it will compensate these customers to the tune of $168 million total, resolving claims for more than 95% of the wrongfully accused.

The company claims this issue was a result of a faulty theft reporting system, a system the company alleges was fixed following its 2020 bankruptcy. However, a lawsuit filed in Delaware earlier this year shows that the practice was still in effect following the company's Chapter 11 proceedings. Hertz previously denied all claims of the false theft reports until this April, when the newly minted CEO, Stephen Scherr, admitted that some customers had been affected by the "glitch".

Despite this, some of the accused hadn't even rented from Hertz previously. Other victims include NASA employees operating government-rented vehicles and customers with cars rented by their insurance companies following accidents. Customers who returned vehicles on time later received correspondence from the company that it had reported the vehicle as stolen and that an arrest warrant had been issued.

The hundreds of millions in payments will be finalized by the end of this year, and statements in recent Securities and Exchange Commission filings show that the company isn't worried about this affecting its financial standing. Additionally, Hertz plans to recoup the majority of this expense from its commercial liability insurance policies, though the company has had to file lawsuits against its insurers to this effect.

Emerging from bankruptcy in 2021 and recently reporting a return to profitability, the settlement payments may not damage Hertz's bottom line but its reputation among consumers very well could. With new leadership at the helm and continuing strong travel demand, the true outcome of a rocky few years for Hertz has yet to be seen. Despite this, company executives claim to see a future of improved customer relations.

[jon-nyc]

@Jolly said in Suing Hertz:

Does that make them judgement -proof?

I get this post is a year old, but it’s worth commenting on anyway.

Had the judgement occurred before they filed, it would have been just another debt they had and the creditor would have become a partial owner of the “new”, reorganized Hertz. But they went bankrupt in May of 2020, and the judgement happened well after the reorganization was complete. So the new owners of Hertz (which were more or less the pre-bankruptcy creditors) now own the company and are in the hook for the judgement.