As Hertz is fighting claims in Delaware court that it misled police into arresting dozens of customers on false auto theft reports, the car rental company’s new CEO has promised to “do right” by its customers and resolve the issue “very, very, quickly.”
“This is among the first things I have started to look to take care of and deal with in the first 30 days I have been at the company,” Stephen Scherr, who took over as CEO on Feb. 28, told CNBC. “We will do right where our customers have been negatively affected.”
Hertz is facing lawsuits claiming it took part in “egregious business malpractices,” according to filings in the U.S. Bankruptcy Court in Wilmington involving 230 plaintiffs seeking more than $500 million in damages.
Their claims have a common theme: Hertz gave police incorrect or incomplete information leading to customers being imprisoned despite meeting their rental contract and payment obligations. The lawsuit alleges Hertz knowingly withheld customers’ payment history when filing theft reports to police.
Attorneys representing the customers say Hertz failed to internally validate and verify information submitted for police reports in an effort to cut down costs, essentially, “letting the police find the cars it has lost,” according to court documents.
Outstanding police reports, subsequent arrests and prosecutions continued for months and years, said Francis Alexander Malofiy, an attorney representing a group of claimants.
“If Mr. Scherr is serious about changing course, he should immediately take steps to retract all the faulty theft reports and right the wrongs Hertz has inflicted,” Malofiy said. “Some of our clients, and potentially many other victims, are still being prosecuted based on false theft reports.”
FALSE ARREST CLAIMS:In Delaware court, Hertz fights claims it had customers falsely arrested
One such customer who rented a truck from the Hertz Car Rental office at the Wilmington train station in April 2019 and who is part of the false arrest claims, said that he spent three months incarcerated after being charged with stealing the truck, according to court documents.
“I lost everything, my life, my reputation, everything,” said Hanna “John” Ayoub in November after the lawsuit was filed.
Ayoub said he was arrested despite making $300 weekly payments to Hertz for the truck and extending the rental multiple times, according to receipts that he provided to Delaware Online/The News Journal. The charges against him were later dropped, he said.
In recently unsealed court documents, Hertz admitted it files an average of 3,365 police reports about stolen vehicles involving its customers each year. Since false theft report cases have been known to occur over the past seven years, Hertz has levied theft charges on more than 23,000 people, records show.
“We believe that the numbers are higher,” Malofiy said. “And if the CEO even today did not acknowledge the full scope of the harm, it shows insincerity.”
Contact Yusra Asif at yqureshi@delawareonline.com.
