Hertz false arrests: Company yet to drop prosecution despite promise to do 'right' by customers

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Car rental company Hertz has yet to drop charges against any of the outstanding 40 cases of alleged car theft even after new CEO Stephen Scherr said the company would rectify such erroneous cases. 

"When you have the CEO that knows what the damages were and the pain and harm visited upon these victims […] and when he went out there saying that this is going to get resolved, we're pushing it behind us, all right," Attorney Francis Malofiy told FOX Business. "He has to follow through on his word and he failed to do so."

Some 165 Hertz customers, as of Nov. 2021, claimed that they had legal and appropriate rental contracts with the company, but in each case ended up in trouble with police who told them the vehicle had been reported stolen. New evidence suggests the company did so by backdating rental agreements after payments for extensions failed, but no one alerted customers to the change. 

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Hertz was among the companies to file for bankruptcy in 2020. It has since emerged from court protection. (Photo: Constanza Hevia H. for The Wall Street Journal) | The Wall Street Journal

Scherr, who took over the post in Feb. 2022, appeared on Bloomberg TV in early April and pledged that Hertz would tackle the issue of reports of false arrests as means of reclaiming vehicles. He claimed the company had implemented new policies to prevent further arrests and would look to settle with victims. 

The CEO appeared on CNBC two days later, saying it’s "not acceptable to Hertz to have any customer, a single customer, sort of, caught up in some of what’s happened."

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Hertz previously told the Philadelphia Inquirer that the company had "no mechanism to withdraw a criminal referral because […] it has to maintain a relationship of ‘integrity and responsibility’ with law enforcement." 

"In the rare instances this happens, if you report a crime, and you later say it didn't happen, then law enforcement tends not to believe you if you retract it or say you were mistaken," a spokesperson told the Inquirer. "Hertz's continued good relationship with law enforcement is important."

Malofiy represents 40 of those customers, saying he works with anyone who brings a claim against Hertz over the issue. 

"In April, Hertz CEO Stephen Scherr went on national television and admitted that Hertz had customers wrongfully arrested," Malofiy wrote in a letter to Hertz obtained by FOX Business. "This contradicted years of emphatic denials by Hertz to the contrary. This means innocent customers were held at gunpoint in front of their families, arrested, jailed, and prosecuted." 

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The lawyer took issue with Scherr’s attempt to label the false arrests as actions by "old Hertz." 

"Despite his repeated promises, Scherr has not settled a single case and there are no ongoing settlement discussions," the letter added. "It is abundantly clear that he and "new" Hertz are in fact more of the same and his statements were nothing more than an attempt to stall and distract from Hertz’s hideous conduct." 

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Hertz provided no response on the matter of pending litigation and intent to drop charges, telling FOX Business that "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," a Hertz spokesperson said. "The vast majority of the current legal claims involve renters who were many weeks or even months overdue returning vehicles and who stopped communicating with us well beyond the scheduled due date."

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But new court documents attest that Hertz would agree to rental extensions with customers and would use the original rental date if payment did not process - without alerting customers to the problem. 

"They’re turning civil payment disputes—at most—into criminal matters by deleting rental extensions and backdating due dates; when it’s actually a failure to process payment or failure to process an extension, or simply they lost or misplaced inventory," Malofiy explained. "The difference is that if you lost or misplaced inventory – that’s your fault."