Senators call for investigation of Hertz after hundreds of rental car customers claim false arrest

KATIE WEDELL 

USA TODAY 

PUBLISHED March 31, 2022 

Two U.S. Senators are urging the federal government to investigate Hertz rental car company's business practices that have led customers to make hundreds of allegations of false arrest.

Sen. Richard Blumenthal, D-Conn., who chairs the Senate's Consumer Protection Subcommittee, wrote to the company this week about Hertz customers being arrested for driving rental vehicles the company incorrectly reported as stolen.

That currently is the focus of a lawsuit in U.S. Bankruptcy Court in Delaware.

Blumenthal requested information on the company's policies and practices and demanded that Hertz "swiftly correct course." 

Blumenthal cited USA TODAY's reporting on the false arrest claims in his letter calling Hertz practices "staggering in magnitude and devastating in impact."

"I write to express serious alarm over reports suggesting that Hertz has, for years, wrongly reported customers to law enforcement for vehicle theft," the letter addressed to Stephen Scherr, CEO of Hertz Global Holdings Inc. said.

"This is all the more concerning because arrests – even false ones – have life-changing and long-lasting consequences. To that end, I demand information about the policies and procedures Hertz has in place related to stolen vehicle reports and that Hertz take immediate steps to provide redress to customers who have suffered the profound and enduring harm of a false arrest."

► LAWSUIT:Hertz accused of falsely reporting that customers stole rental cars

► COULD RENTING A CAR LEAD TO JAIL?:If you’ve rented a car from Hertz, there could be a warrant out for your arrest

Hertz, in a response to the senator's comments, said in a statement: "Hertz cares deeply about our customers and successfully provides rental vehicles for tens of millions of travelers each year. As it relates to the claims made against the company, we are committed to doing what is right by our customers, while also continuing to protect and defend against activities intended to cause harm to Hertz."

Sen. Elizabeth Warren, D-Mass., sent a letter to the White House Competition Council this week asking that it examine whether consolidation in the rental car industry has caused rising prices and diminished customer service. 

She cites the reports of Hertz customers being falsely arrested as one of the potentially fraudulent practices to be investigated. 

Warren called it a "disturbing pattern (that) has led to traumatic experiences, job losses and even jail time for customers."

In response to Warren’s letter, Hertz said: “We take these matters seriously and are reviewing the letters.” The company also has said the cases involve a small fraction of the number of vehicles it rents. 

Warren's letter said three companies claim to have over 90% of the rental car market share in the United States. Enterprise Holdings, composed of Enterprise, National, and Alamo, has a 33% market share; Hertz Global Holdings, made up of Hertz, Dollar, and Thrifty, controls 36% of the market; and Avis Budget Group controls 26%, the letter said.

"Over the past year, these rental car companies have flourished," the letter said. "Avis reported new record net income and earnings in November 2021, and Hertz went from bankruptcy in May 2020 to a record-high profit margin in the third quarter of 2021. Enterprise Holdings is a private company that releases little information to the public, but it reportedly increased U.S. revenue by nearly $1.5 billion in 2021, up 10.5% from 2020."

More than 230 complainants have accused Hertz of falsely charging them with theft for cars they say they returned and paid for.

A Delaware bankruptcy judge has been deciding which claimants must be considered creditors under Hertz's reorganization plan. 

Hertz exited bankruptcy last June, but the false arrest claims are ongoing and demand approximately $530 million in damages from the company.

► Rental cars:Some Hertz customers face arrest. What are your rights?

Hertz has maintained that virtually all of the claims of false arrest are "meritless" and should not be allowed to proceed in bankruptcy court. 

"The vast majority of these cases involve renters who were many weeks or even months overdue returning vehicles and who stopped communicating with us well beyond the scheduled due date," Hertz said in a statement.

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. They’ve endured a collective 3,600 months of prosecution. Some took plea deals, admitting to stealing cars they didn’t steal, just to make the ordeal stop. 

Other cases are still pending in criminal court and at least one new potential claimant has come forward since USA TODAY reported on the cases in early March, according to an attorney on the case. 

In recently unsealed court documents, Hertz admitted it files an average of 3,365 police reports about stolen vehicles involving its customers each year.

Hertz argued against the unsealing of that information and said in a statement: "While we believe that the business numbers provided to the court under seal are commercially proprietary information, we will respect the ruling. We believe that a review of these business numbers reinforces what we have consistently stated that situations where vehicles are reported to the authorities are very rare and happen only after exhaustive attempts to reach the customer."

The company has repeatedly said that it handles more than 25 million rental transactions in the United States per year – and that .014% fall into the "rare situation where vehicles are reported to the authorities after exhaustive attempts to reach the customer." 

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