Hertz faces new claims of false arrests for cars reported as stolen
Hertz Corp. faces more complaints that customers have been arrested at gunpoint over disputed reports that they stole the cars they rented, an issue the company’s new chief executive pledged to eradicate.
Lawyers suing Hertz say they are preparing to file around 100 new claims, a move that would bring the total number of fraudulent arrest allegations to more than 300 and complicate efforts to resolve a legal battle unfolding before a federal court.
The new claims are an early challenge for chief executive Stephen Scherr, who took office in February and pledged this month that Hertz would change its practices to protect customers who have done nothing wrong against false arrests.
Currently, at least 230 customers say in court documents that Hertz wrongly called the police, most of the time when the company was negotiating with them about overdue rent. A small number of cases, including two new claims, allege errors made by Hertz employees caused police to arrest innocent customers suspected of driving stolen cars.
In one of the new claims, a driver was arrested in Beverly Hills, California in February on his way to film a music video, and a couple were arrested in Texas in March while the driver was in costume for a renaissance festival, police records show.
Hertz files thousands of criminal cases against customers each year, according to court documents, saying the majority involve disputes over vehicles that weren’t returned on time and were likely stolen. Drivers of cars mistakenly labeled as stolen say in lawsuits the reports have sometimes led to chilling encounters with police.
The clients’ lead attorney is Francis Alexander Malofiy, a Philadelphia attorney who has spent years battling Hertz in court. He says many new clients have come to see him in the months since news of the false arrest lawsuit became public.
New applications will be filed in the coming weeks, Malofiy said. Most will land in front of a federal judge in Wilmington, Delaware, where the company reorganized into bankruptcy as the pandemic began to hurt the economy in 2020. Hertz left bankruptcy protection in June, but a company Screen stayed behind to resolve disputed debts, including bogus arrest requests.
Some of the new claims will end up in various state courts because the incidents occurred after Hertz exited bankruptcy, Malofiy said. Lawyers for the drivers say all of the cases could cost Hertz more than $700 million. The company said in a quarterly report Wednesday that it did not expect a significant impact.
Hertz said in an emailed statement that it is still investigating the two new cases, and they appear to be different from the bulk of previous late returns claims. Hertz Corp. is the unit of Hertz Global Holdings Inc. that operates the Hertz, Dollar and Thrifty rental brands in regions including Europe, the Americas, Asia, Africa and Australia.
“In the event that we have made an error, we will endeavor to correct the situation with any customer affected by our actions,” the company said. Meanwhile, it’s adding more technology and bringing in additional repossession agents and services “to decrease the possibility of innocent customers being affected.”
Hertz said it tries to contact customers by phone, text, email and certified letter about overdue cars and collect them through private means, working for around 63 days after the return date before implicating the police.
In the case of Texas, Jeremy Benjamin, 35, and Brittany Morgan, 32, picked up a Ford Mustang from Hertz at the Houston airport on March 9. Hertz apparently rented the car without realizing it had the wrong license plate, according to Larry Boggus, a city police officer from Memorial Village, Texas. The plate had been reported stolen from a Hyundai Sonata, which is why the car was pulled over in the small Houston-area community.
“Hertz probably didn’t check the license plate during the rental inspection,” Boggus said in an interview. “We had several stolen rentals that weren’t really stolen.”
The couple, who live in Naples, Florida, said they were terrified of being confronted by police with guns in hand days after picking up the vehicle.
“As we were driving back with the car, we were pulled over and held at gunpoint,” Morgan wrote in a legal statement. “It was traumatic and humiliating. The police told us the car was stolen.
Music video director Michael Okoasia, 29, was arrested in Beverly Hills while leading his film crew to a concert in Southern California on February 5. He was alone in the Nissan Versa while the equipment and crew followed, Okoasia said in a sworn affidavit. provided to Bloomberg News.
He was handcuffed and placed in the back of a patrol car as part of the arrest, which involved 10 officers with firearms, the statement said. Beverly Hills police were alerted after an automated license plate reader scanned the vehicle, which had been reported stolen, according to a police report.
“I lost about $20,000 because of the music video that we couldn’t shoot,” Okoasia, who lives in New York, said in the affidavit.
In both cases, the people were detained but not charged. The couple in Texas were allowed to keep the car and continue on their way. The videographer was released, but the car was towed because it was reported stolen.
A small number of customers are arrested because the company cannot find a vehicle, according to court documents. In recent interviews, Scherr said such incidents are unacceptable and that policies have been changed, adding that falsely arrested customers are a small fraction of the millions of cars leased by Hertz.
The Florida-based car rental company has tried to put the issue behind it, arguing that the allegations only apply to the former Hertz before bankruptcy. “This is not a new Hertz issue, this hasn’t been a Hertz issue for a while,” company attorney Christopher Shore said in court Jan. 4.
Bloomberg’s Sridhar Natarajan contributed to this report.