Hertz OKs settlement

Hertz will pay nearly $170 million to settle hundreds of false theft claims involving its customers. The Estero-based rental giant announced the news early Monday. In a news release, Hertz said it had settled 364 claims, "bringing resolution to more than 95%" of the total disputes. Aggrieved customers accused the company of wrongful theft arrests for cars they legally rented. Some customers claim they got pulled over, arrested and prosecuted for stealing cars because Hertz couldn't locate its own vehicles after they got returned. Others have complained of various other mix-ups with their rental returns, extensions or payments. Hertz will pay about $168 million by year-end to resolve the majority of pending claims. While that's a big number, Hertz stated that it "expects to recover a meaningful portion of the settlement amount from its insurance carriers."

Not long after joining Hertz as CEO in early February, Stephen Scherr vowed to remedy the situation, making it a top priority. He promised to "do right" by customers who had not been treated fairly.

"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," Scherr said.

He continued: "While we will not always be perfect, the professionals at Hertz will continue to work every day to provide best-in-class service to the tens of millions of people we serve each year. Moving forward, it is our intention to reshape the future of our company through electrification, shared mobility and a great digital-first customer experience."

Hertz stated it does not expect the settlements to have "a material impact on its capital allocation plans for the balance of 2022 and 2023," meaning its anticipated investments in the business remain unchanged.

The company sent out its first wave of settlement offers in June, saying it was just a start, as it reviewed the cases one by one.

When Hertz exited bankruptcy last year, the false arrest lawsuits stayed behind in court unresolved, as the company focused on re-establishing itself as a rental car leader.

In May 2020, when Hertz filed for Chapter 11 protection — after taking a heavy hit from the pandemic — it faced a little over 20 false arrest claims. They ballooned from there.

Some cases were moved out of bankruptcy court, to state courts.

Before the settlements, the plaintiffs' attorneys estimated total damages at more than $960 million. Hertz, however, characterized the amount as overblown and overstated.

The alleged damages include everything from lost wages to mental anguish.

The plaintiffs' attorneys have described the problem as systemic for Hertz, which the company denies.

Hertz revealed in court documents that it files about 3,365 police reports every year charging customers with car theft.

That would mean more than 23,000 of the car rental firm's customers have had theft charges levied against them over the past seven years, when claims of false arrests began to bubble up.

It's unclear how many of Hertz's theft reports might have been improperly filed, as rental car theft is a real issue. The National Insurance Crime Bureau reports an estimated 30,000 rental cars are stolen every year.

In addition to its namesake, Hertz operates the Dollar and Thrifty car rental services. The false arrest claims involve all three of the company's brands.