More than 180 Hertz customers are suing the car rental company in bankruptcy court, seeking damages of just under $529.7 million. Most of these customers were stopped by police, and sometimes arrested, for driving Hertz cars that they had legally rented.
According to their filings, for years Hertz has falsely reported that its cars were stolen as part of its regular business practice, "ensnaring its customers in accusations of car theft, throwing them in jail on felony charges, prosecuting them, burdening them with criminal records that impact their livelihoods, and separating them from their family and loved ones."
Why would Hertz claim that its cars were stolen when legitimate renters were driving them? Believe it or not, the filing claims this is a cost-cutting measure. In some cases, the company simply misplaces a car or a rental contract and doesn't know where the car is. Rather than upgrade its malfunctioning inventory systems or conduct its own investigation when cars are unaccounted for, Hertz simply reports these cars as stolen, the filing claims. The plaintiffs say the company is "effectively using the police, criminal justice system, and taxpayers to subsidize inventory control for a private corporation." The unfortunate renters who happen to be driving those cars are collateral damage.
In other cases, renters extend their contracts, but the temporary hold Hertz places on their credit or debit cards fails to go through. This usually happens because they either don't have enough money in their checking accounts or don't have enough available credit on their credit cards at the time the hold is placed. In many cases, customers will still pay for the rental, either because funds will be available by the time the car is returned and their card is actually charged, or because they use a different payment source. When a hold fails to go through, the suit alleges, Hertz routinely puts the due date back to before the extension was granted, making the car badly overdue.
Incredibly, the filing alleges and customers reported to CBS News, Hertz representatives have told customers that the charge went through and the rental extension was authorized--but then the company filed a theft report anyway. John Ayoub, a particularly unfortunate renter, has a recording of a Hertz employee extending the rental for him, saying "Yup, you're all set." Not long afterward, he was arrested and spent four months in jail for supposedly stealing the car. Meanwhile, his card was charged. In these cases, too, plaintiffs argue, Hertz is saving itself both money and work by handing off the problem to law enforcement rather than dealing with it directly.
Asked for comment, Hertz said it would respond to the filings shortly. In the meantime, a company representative referred me back to Hertz's original statement about the lawsuit. You can find that statement in its entirety in this piece. In brief, Hertz said that it cares about its customers and successfully provides tens of millions of vehicle rentals each year. It added that most of the cases at issue involved renters who were "many weeks or even months overdue returning vehicles and who stopped communicating with us well beyond the scheduled due date."
If indeed all this was a cost-cutting measure by Hertz, it's backfired spectacularly. Defending, settling, or losing a lawsuit for more than half a billion dollars is bound to cut into the company's profit margins. And, as the case progresses, it seems highly likely that additional plaintiffs will either join the existing suits or start new ones.
Why I Changed My Dental Insurance
What does the Hertz lawsuit have to do with dental insurance? Oddly enough, I started thinking about Hertz recently when I switched my dental insurance to a new company. For years, I'd been a loyal customer of a venerable insurance provider. But then I got a new dentist, and the first time she worked on my teeth, the claim came back denied--because, the company said, the dentist in question was not "credentialed" with them.
Not only was this untrue--my dentist was indeed credentialed with my insurance company--this particular dentist was Yale educated and had gone on to further study in dental prosthetics and other advanced topics. She was one of the most credentialed dentists I'd ever met.
The accounts manager for the dental practice got on the phone with my insurance company and straightened the whole thing out, or so she thought. She was told the claim would be fast-tracked. And, indeed, the insurance company sent back a quick response. But it was another denial, once again because the dentist supposedly wasn't credentialed with them. At that point, with the end of the year approaching and a choice to make about my 2022 coverage, I decided it was time to try a different insurer.
I'm quite certain that if I were to ask my former insurer's executives about this incident, they would assure me that it was some kind of glitch and that it's not their policy to deny legitimate claims. And I'm just as certain that somewhere along the way, a cost-cutting decision was made: When in doubt, deny the claim and leave it to dental practices and their customers to fight the decision if it happens to be wrong.
In a much smaller way, it's the same approach the Hertz plaintiffs are claiming Hertz took. It amounts to this: Do whatever you can to cut your own costs, and if that means extra work for people outside your company and extra trouble for some of your customers, that's OK because it's not your problem.
That's a bad way to do business. It's also a bad way to save money. It's cost my insurance company a longtime customer with healthy teeth who always paid her premiums on time. For Hertz, it could wind up costing $529.7 million.