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Here’s Why You Might Get Arrested For Renting From Hertz

Some 230 people are suing the car rental company for false arrest.

Renting a car isn’t a crime, and neither is returning it a little bit late. But nonetheless a truly shocking amount of people have been arrested because they rented from Hertz  (HTZ) - Get Hertz Global Holdings Inc Report

Even if they have proof that they did no wrong doing, they’ve faced jail time and damage to their reputations that have made it hard to get jobs or buy a home.

Some 230 plaintiffs are currently suing Hertz for alleged false arrest and in some cases prosecution, with customers seeking more than $500 million in combined damages. At a recent hearing in a Delaware U.S. Bankruptcy Court, a judge ruled that several of the lawsuits can now proceed.

Why Are People Being Arrested?

Hertz filed for bankruptcy in May 2020, as the pandemic devastated the travel industry and the company owed $17 billion in debt. The complaints against Hertz are filed into groups, depending on when the lawsuits were filed in terms of Hertz's bankruptcy case. Many of the lawsuits were filed before the bankruptcy, and they remained after the company emerged from Chapter 11.

A judge cleared 17 cases against Hertz to move forward last week, joining more than about half of the 230 that are also currently pending. Other claims will be decided at a later date. 

Francis Alexander Malofiy, the Pennsylvania-based lead attorney for the claimants, indicated to USA Today that “230 is not the majority. … It's the tip of the iceberg,” and “you're talking 20,000 people who were stuck in the criminal justice system because they had a dispute or an issue with their rental, or that (Hertz) couldn't find their car.”

According to court documents, the current group of claimants has spent a total of 2,742 days in jail or prison because of false arrests. 

Taken together, the lawsuits against Hertz allege a pattern of missing inventory in which Hertz will immediately file police reports when inventory is missing, rather than conducting internal investigations to locate late or missing vehicles or to correct errors in their records. Even when the errors are reported to the company, the files are often not updated.

Last month Hertz lost a motion to keep information about the volume of its stolen car reports sealed. In the unsealed court documents, Hertz admitted it files an average of 3,365 police reports about stolen vehicles involving its customers each year. 

False theft report cases have been an issue for Hertz for the past seven years, according to USA today, which means theft charges have been levied against more than 23,000 people. It’s unknown how many of the people charged are innocent, though it seems that many people are going to jail and having their reputations allegedly ruined over simple clerical errors. 

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The USA Today story notes that even though one man who was accused of theft was able to provide a rental agreement and bank statements where his debit card had been charged, Hertz maintained through the trial that the company had no record of him ever renting a car.

Hertz Knows This Is A Problem

During a lawsuit against Hertz in 2017, the company’s national vehicle control supervisor took the stand and reportedly admitted on cross-examination that the company’s police reports do not always contain accurate payment information, contacts with customers, and that Hertz does not correct or supplement reports that it knows are false or misleading.

The reason for this seems to be, according to Malofiy’s quote in USA Today, “Hertz is on record as saying that even when they learn information (in police reports) is inaccurate, they refused to correct it because it would hurt their relationship with the police and the police will no longer take their false police reports.” 

Court records showed that after multiple reports from Hertz at their Indianapolis and Louisville airports locations of stolen vehicles that later ended up being located on Hertz's lots, the police reportedly said they wouldn't take new reports from the company.

In response to the lawsuit, Hertz said the majority of the customers involved in the suits failed to return their cars for "weeks past their due date,” despite attempts to contact them. 

The company also told USA Today that “Hertz cares deeply about our customers, and we successfully provide rental vehicles for tens of millions of travelers each year. Unfortunately, in the legal matters being discussed, the attorneys have a track record of making baseless claims that blatantly misrepresent the facts."

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Hertz Under Fire Post Bankruptcy 

Hertz emerged from bankruptcy last summer. It laid off or furloughed 20,000 employees and sold more than 200,000 of its  vehicles. Before the pandemic, the company had a global fleet of about 650,000 vehicles.

Hertz was saddled with debt before the pandemic began, as its widely believed that in its bidding war with competitor Avis  (CAR) - Get Avis Budget Group, Inc. Report ,it paid too much, $2.3 billion, to buy Dollar and Thrifty. Now, the company has been feeling the pressure of both the employee shortage and the lack of computer chips necessary for it to stock back up on cars.

Since it’s return, Hertz has been frequently criticized for poor customer service, and stories of people either being overcharged, (prices were up a 147% compared to pre-pandemic levels) or thinking they’ve reserved a car only to find none are available, have become common on social media.

In October, Hertz announced a 39% profit margin for the third quarter, the company’s highest since 2015. It later authorized up to $2 billion in stock buybacks. This move earned a reprimanding letter from Sen. Elizabeth Warren, criticizing the company that “is happy to reward executives, company insiders, and big shareholders while stiffing consumers with record high rental car costs,” and “the company paid out more than $16 million in bonuses to top executives and senior managers days before it filed for bankruptcy in 2020.”