Hertz Global Holding’s new CEO, Stephen Scherr, said last week that customers have been harmed by the car rental company’s policies, which have led to bogus arrests.
Scherr told multiple news outlets, including CNBC’s Squawk Box, that the company “will make things right where our customers have been negatively affected” and that “we’ve changed our policies to prevent that from happening.”
More than 230 plaintiffs are suing the company for wrongful arrest and, in some cases, prosecution. Lawyers for that group say they know there are more cases, with warrants for people who rented from Hertz years ago continuing to surface today.
Scherr’s comments came amid mounting pressure from Congress, with Sen. Elizabeth Warren, D-Mass., urging the White House Competition Council to review car rental companies, including Hertz; and Sen. Richard Blumenthal, D-Conn., demanding answers from Hertz.
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In a letter to the Federal Trade Commission on April 6, Blumenthal urged FTC Chairman Lina Khan “to initiate an investigation into Hertz’s inaccurate and potentially unfair practice of reporting its vehicles as stolen and taking appropriate enforcement actions to ensure that Hertz consumers are not falsely arrested.” or otherwise injured.”
He cited reports from USA TODAY and other outlets in his letter about Hertz, which is based in Estero, Fla., and operates car rental brands Hertz, Dollar and Thrifty.
What did Hertz CEO Stephen Scherr say?
Scherr, who took over as CEO on Feb. 28, exposed the issues behind the wrongful arrests to CNBC: When a car was mistakenly reported stolen, that report was not overturned even though it should have been. When a customer then rented a vehicle, he was stopped and arrested for driving a stolen car in some cases.
“It’s not okay for Hertz to have one customer — just one customer — somehow caught up in some of what happened,” Scherr said. But he added, “to put that into context, if you look at the roughly 100 people affected…we engage in 15 million transactions a year, that’s 1/100 of a percent of those transactions.”
Hertz customers have said they were arrested and jailed because the company accused them of stealing cars they paid to rent and, in some cases, returned long before their arrest.
More than 230 of them are suing the company for a total of more than $530 million in damages. The case is being heard in US Bankruptcy Court in Delaware.
Hertz emerged from bankruptcy last summer and in February hired Scherr, a former chief financial officer of Goldman Sachs, to guide the company toward new partnerships, such as adding 100,000 Teslas to its fleet.
“We appreciate Stephen Scherr’s commitment to resolving the lawsuit and Hertz’s strong commitment to resolving these cases,” said Francis Malofiy, a Philadelphia attorney representing the plaintiffs. “However, it’s one thing to tell Wall Street that Hertz wants to put this behind them. It’s another to pay hundreds of millions of dollars for the damage they caused.”
He said it remains to be seen if Scherr’s words “were just hot air” or if the company will deliver on its promise.
A spokesperson for Hertz declined USA TODAY’s request to interview Scherr and responded to questions about his public comments with a written statement nearly identical to one the company has released on multiple occasions in the past.
“Hertz cares deeply about its customers and we successfully provide rental vehicles to tens of millions of travelers each year. Where our customers have been negatively affected, we are committed to doing what is right for our customers. At the same time, we will protect and defend against false claims intended to harm our business.
“The vast majority of ongoing legal claims involve renters who were several weeks or even months late in returning vehicles and stopped communicating with us well past their scheduled due date. These situations where Late rentals reported to authorities are very rare and only occur after exhaustive attempts to reach the customer.
When asked what policies would change specifically to address the issue of false arrests, Hertz sent out a statement saying, “We are continually improving our systems, processes and training to ensure they meet our high service standards.”
Customer experiences differ from the situation described by the CEO
While some of the plaintiffs in the case against Hertz were actually arrested in cars that were mistakenly reported stolen, as Scherr described, many other people claim to have been falsely accused of stealing cars for which they had extended rental contracts and paid additional fees. money to keep longer.
If Hertz thought someone was late returning a car or hadn’t paid the correct amount, it should have initiated a payment dispute and gone to arbitration, according to the contract it has customers sign, claims claim. plaintiffs’ attorneys.
Instead, a theft report is filed that the client is completely unaware of, sometimes finding out there is a warrant for his arrest months or years after he thought he had successfully returned. and had paid for his rental car, Malofiy said.
“They’re turning a payment dispute into a criminal case,” he said.
Hertz did not respond to questions about these payment dispute circumstances which represent about 85% of current claimants, according to Malofiy. The missing inventory circumstances described by Scherr account for only 15% of claims.
And new cases are arriving daily, Malofiy said. Many people contacted USA TODAY after reading the lawsuit saying they had also been wrongfully arrested.
Cancellation of police reports contested
Plaintiffs’ attorneys also question Scherr’s statement about trying to overturn erroneous police reports, as the company has repeatedly said it can’t or never wants to overturn a theft report once. that it is deposited.
“Stephen Scherr’s recent claims that the company removes incorrect police reports are not true for the vast majority of Hertz false police report arrests and victims that we represent,” Malofiy said.
In December, Hertz wrote emails to two customers complaining about bogus arrests in which a customer service representative said the company had “no authority” to take over a police report.
ReJeana Meado rented a Hertz-owned Thrifty car for a wedding in Houston May 13-16, 2021.
She dropped off the car in the early morning hours of the 16th, as instructed by airport security personnel. But weeks later, she received a letter threatening her with arrest, accusing her of not returning the car.
What happened over the next six months was described by Meado in his court documents as a “fiasco”. Dozens of calls and emails to and from Hertz with conflicting information.
He was told the car had been located and then never found. She was told she had to file a police report and then she had to file internal theft reporting forms with Hertz. Her credit card was charged over $5,000 for a full month’s rental, even though she only had the car for three days. Then she was threatened that she still owed more than $5,000 that she had already paid. He was told that there was no record of the dispute, that everything was resolved and that no complaints of theft had been filed. Then in December, she was told that she had in fact been reported to the police for theft.
“We are not authorized to withdraw the declaration of theft; therefore, you must settle this matter through the legal system. This is our final decision on this matter, and it will not be reconsidered,” Lori Barnard of Hertz’s customer service executive wrote to Meado in an email Dec. 6.
Manuel Garcia received a very similar email from Hertz in December.
He had entered into a long-term lease with Hertz in January 2021. These agreements are more like leases than rentals. The customer’s credit card is debited at the end of each month that he keeps the car.
According to his court complaint, Garcia realized his credit card had never been charged at the end of October and called the Doral, Florida location where he had rented. An employee who knows him as a regular customer told him he just needed to come and renew the long-term rental in the next few weeks.
Before he could do so, Garcia’s car was towed away while he was having dinner. The driver said the car was reported stolen by Hertz. After numerous phone calls and emails to Hertz, he got the same response from Lori Barnard of Hertz customer service.
“(W)e have no authority to dismiss the police report that was filed with the
authorities. Therefore, you need to take this matter to court
system,” Barnard wrote to him on December 1.
A spokesperson for Hertz told the Philadelphia Inquirer in 2020 that the company does not have a “mechanism” to take down reports and does not do so because “in the rare instance that this happens, if you report a crime, and you later say it didn’t happen, then law enforcement tends not to believe you if you retract it or say you were wrong,” the doorman said. “Hertz’s continued good relationship with law enforcement is important.”
Both Meado and Garcia are concerned that there are warrants for their arrest, which for Garcia could affect his immigration status.
Malofiy said if Hertz is serious about vindicating customers wrongly accused of theft, the company should immediately withdraw all pending police reports, as new victims are discovering warrants every day.
“Outstanding police reports, subsequent arrests and prosecutions continue to follow the victims for months or, in a number of cases, years after they proved they were legally renting Hertz customers,” said said Maolfi. “If Mr. Scherr is serious about changing course, he should immediately take action to retract all erroneous theft reports and redress the harm that Hertz has inflicted on hundreds of our customers and tens of thousands of other victims of its theft reporting practices.”
The Associated Press contributed to this report.
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