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The Street
The Street
Tony Owusu

Hertz Pays A Big Price for False Customer Theft Arrests

Hertz  (HTZGQ)  is probably getting off easy all things considered. 

The car rental company landed in hot water earlier this year after dozens of plaintiffs filed class action lawsuit against the company for having them arrested for stealing their vehicles. 

The problem of course was that the customers in question hadn't done anything wrong. That didn't stop the police from arresting them, however. 

But those 47 complainants were apparently just the tip of the iceberg, and now the company is paying a hefty price for being a Karen to its customers.


Hertz Settles Claims

Hertz announced on Monday that it will pay about $168 million to settle claims from 364 people who claim to have been wronged by the company. 

"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. 

Hertz says the payment brings a resolution to more than 95% of its pending theft reporting claims, lifting a big weight from the company's future plans. 

"Moving forward, it is our intention to reshape the future of our company through electrification, shared mobility and a great digital-first customer experience," said Scherr. 

The company said it does not expect this settlement to have a material impact on its capital allocation plans for the rest of 2022 and 2023. 

Hertz and Stolen Vehicle Reports

Customers in one of the lawsuits against Hertz claimed they were blindsided by their arrests, sometimes at gunpoint, especially since they all had returned their vehicles to the company. 

However, Hertz's own internal mechanisms failed to alert the company that their cars had been returned, leading to needless and inherently violent confrontations with law enforcement. 

But Hertz apparently has a habit of filing excessive stolen vehicle reports. 

Earlier this year, one whistleblower telling News Nation that the company uses the cops as a "repo company and the court system as a collection company."

A court order recently revealed that Hertz reports about 3,000 cars stolen annually. 

Hertz has been having this issue since at least 2015, according to media reports. So the majority of legal claims related to false arrests were funneled into bankruptcy proceedings once the company entered Chapter 11 in May 2020. 

But the settlement from Monday includes post-bankruptcy complainants. The company emerged from bankruptcy in June 2021. 

Earlier this year, Hertz told the Wall Street Journal that it had sent nearly 60 confidential settlement offers to individuals "who had a negative experience with our company."

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