At least 40 Hertz customers are facing prosecution and possible jail time when they say their only "crime" was driving the cars they had legally rented. These customers are suing Hertz over what they claim is a widespread pattern of false arrests. And they're demanding that the company put a stop to the prosecutions against them by withdrawing stolen car reports on the cars they rented--and that were returned long ago.
The demand is a potential embarrassment for new Hertz CEO Stephen Scherr, who called the arrests "unacceptable" and publicly promised to resolve these issues "very, very quickly." He is now being challenged to keep that promise. There's a simple lesson here every leader should learn: Saying the right thing to bolster your company's reputation and your own can seem like a great idea. But if you follow those noble words with inaction, you could wind up making things worse instead of better.
The issue of Hertz customers getting arrested merely for driving their rental cars is a longstanding one. The company has faced lawsuit after lawsuit over it, going back at least to the 1970s. Why would this happen? In most cases, the customer asked to extend a rental and was told that the extension was approved. But subsequently, the hold placed on the customer's credit or debit card failed to go through and at that point, plaintiffs say, the company issued a stolen car report.
More than 230 customers are currently suing the company for a total of about $530 million over these arrests. But while most of the plaintiffs are simply seeking monetary relief for the harm done to them, their businesses, and their reputations, these 40 people have a more urgent demand. They would like Hertz to withdraw the theft reports on the cars they rented and paid for so they can get back to their lives without the threat of prison hanging over them.
Is Hertz changing due dates?
Other than Scherr's public statements, the company has consistently claimed that it only files stolen car reports when it has no other choice. In response to a request for comment, a Hertz representative sent this statement to Inc.:
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.
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. These situations where overdue rentals are reported to authorities are very rare and happen only after exhaustive attempts to reach the customer.
The question of when and whether these renters were overdue returning their vehicles is very much at issue in the current suit against Hertz. Court documents show that when a renter is given an extension but the hold on their credit or debit card fails, the company may erase the extension, reverting the due date to whatever it was before. That's how some renters who say they thought everything was in order suddenly found themselves stopped by law enforcement, sometimes at gunpoint, for driving a stolen car.
The company also told plaintiffs--again, other than Scherr's statements to the contrary--that it is "not empowered" to rescind stolen car reports. This is untrue, according to Francis Malofiy, an attorney for the plaintiffs. He says that Hertz's failure to do so has resulted in prosecutions lasting for years on end. And, in a letter to Hertz's attorneys viewed exclusively by Inc.com, Malofiy provides names and arrest dates of the 40 plaintiffs still facing prosecution. Many of those prosecutions have been ongoing for years, in some cases going back to 2013.
"Since Mr. Scherr has personally taken ownership of this issue and has confirmed that Hertz does in fact have the power and the ability to rescind false police reports, he should immediately do so," the letter says. "Kindly share this letter with him so that he has the most recent list of pending prosecutions that were procured with false reports that need to be rescinded."
It's rare for a lawyer to call out the CEO of a Fortune 500 company personally like this--but then Scherr's public statements practically invited this response. Will the CEO do as he's asked? For the sake of the 40 people being prosecuted, I hope so.