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Five Hertz customers brought suit in Delaware Superior Court this week, alleging that the company’s poor inventory management led to them being arrested at gunpoint–sometimes minutes after picking up their rental cars. One of the plaintiffs is a 13-year-old girl held at gunpoint while on vacation with her father.
The suit claims these arrests result from Hertz’s longstanding issue with losing track of its own cars. It then reports them as stolen, rather than spend the money and resources to find them on its own, the suit claims. Then, when the cars turn up, the company fails to notify law enforcement. If the claim is true, and if it results from formal or informal company policy, Hertz may have created a world of trouble for its customers and itself as it sought to cut costs.
Hertz is already facing multiple legal actions from hundreds of customers who were arrested for driving their rental cars. But this new lawsuit poses a significant new problem for the company. For one thing, most of the previous arrests happened after customers extended their rental contracts and the resulting hold on their credit or debit cards failed to go through. Hertz’s alleged policy of reporting a car as stolen when a hold fails is certainly questionable–but at least it bears some relationship to something the customer actually did.
In these five cases, customers say they were arrested and held at gunpoint because Hertz had reported their rental cars as stolen before they ever rented them. (In some cases, the arrests took place within minutes after the customers picked up the cars.) Significantly, these incidents all happened after Hertz emerged from bankruptcy in June 2021. This means that these plaintiffs can sue Hertz in state court. Up till this week, all false arrest actions against Hertz were confined to bankruptcy court. The company must now respond to legal challenges on two fronts, perhaps with more to come.
Asked for comment, a Hertz representative provided this statement:
Hertz cares deeply about our customers, and we successfully provide rental vehicles for tens of millions of travelers each year. Where our customers have been negatively affected, we are committed to doing what is right by our customers. At the same time, we will protect and defend against false claims intended to cause our company harm.
Hertz CEO says arrests are “unacceptable.”
Among other problems, this lawsuit could be an embarrassment for Hertz CEO Stephen Scherr. Scherr, who became CEO in February, publicly acknowledged this issue in April. He said then that customer false arrests were “unacceptable” and that the company had put safeguards in place to prevent them in the future. To Scherr’s credit, all of the arrests in this new lawsuit took place before he made that announcement and all but one happened before he became CEO in February. So it’s possible that these arrests are a last vestige of Hertz’s bad old days, and there won’t be any more of them.
I hope that’s true, because if not, Hertz is playing with fire. Real car thieves are felons who often have committed other crimes and may very well be armed. So the police tend to approach them with caution–and with a lot of firepower. According to the lawsuit, for example, the father and daughter plaintiffs were confronted by ten officers, at least some of whom had their guns drawn.
If this keeps up, it’s only a matter of time until something goes horribly wrong and one of those guns goes off. Hertz could potentially face a wrongful death suit that would make its current legal and public relations problems seem trivial.
Like any recently appointed leader, Scherr has a rare opportunity to remake his company and its culture, top to bottom. Let’s hope he does that before it’s too late.
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