Hertz files about 3,365 police reports every year charging customers with car theft after they rented its cars. That number emerged on Thursday, after the car rental company lost a motion in court in its effort to keep the information sealed and out of public view. 

The number is part of the evidence in an ongoing lawsuit in which more than 100 customers are suing Hertz for $529.7 million in bankruptcy court after they were stopped by police, arrested, and sometimes spent months in jail for "stealing" cars they had simply rented. Most of these theft reports occur when a customer renting a vehicle wants to extend the rental, the lawsuit alleges. The customer calls Hertz to request an extension, and the company places a temporary hold for payment on the credit or debit card the customer used to rent the car. 

If that hold fails to go through, for instance because a customer is close to their credit-card limit and hasn't yet paid their bill, Hertz reports the car as stolen "by conversion" to local law enforcement, the lawsuit says. After the customer pays up -- and even after they return the car -- the company does not withdraw the theft report, a Hertz spokesperson told The Philadelphia Inquirer. As a result, a least one former Hertz customer says she learned during a background check that there was an arrest warrant in her name, even though her car rental had been completed and paid for several years earlier, and she had never been notified that there was a problem.

A competitive disadvantage?

Hertz has kept the number of conversion theft reports it files carefully guarded from the public throughout this trial, arguing that if it became known, it would put the company at a competitive disadvantage. Not for the obvious reason that it might make people hesitate to rent from Hertz, but because other car rental companies could use the information to suss out how the company manages its inventory. At least, that's how Michael Severance, vice president of fleet for the Americas at Hertz, explained it in court.

"I can imagine a scenario where, let's say, they know the number of annual police reports that they file and now they know ours," he said. "Let's say they file more or less than us, so they could interpret that to mean we have better front-end controls, for example, preventing thefts, and they could look for ways to improve their abilities to reduce thefts." That argument failed to convince bankruptcy judge Mary Walrath, and she ordered Hertz to reveal the number of theft-by-conversion reports it files. She allowed the company to keep other types of police reports secret.

When asked for comment, Hertz repeated its earlier statement that it cares deeply about its customers, and that the vast majority of its theft reports are filed because rental cars are weeks or months overdue and the customers have stopped communicating with the company. In response to this week's ruling, the company said this:

While we believe that the business numbers provided to the court under seal are commercially proprietary information, we will respect the ruling. We believe that a review of these business numbers reinforces what we have consistently stated: that situations where vehicles are reported to the authorities are very rare and happen only after exhaustive attempts to reach the customer.

As for the specific numbers, of the more than 25 million rental transactions by Hertz in the United States per year, 0.014 percent fall into the rare situation where vehicles are reported to the authorities after exhaustive attempts to reach the customer.

If you do the math, that's 1.4 theft by conversion reports per 10,000 rentals, plus an unknown number of other types of theft reports, since the other categories are still under seal.

If nothing else, now that the number of conversion theft reports is public, it undermines Hertz's often-repeated argument that only a very small -- "tiny, tiny" -- fraction of its police reports result in the arrest of innocent people. Consider that Hertz has been sued for these conversion arrests as far back as 2008. If it really has been filing 3,365 police reports on renters every year since then, that's more than 47,000 reports. That could mean more than 47,000 customers were arrested or stopped by police -- at least in some cases, for no good reason. Many of them may now want to join the lawsuit against Hertz. That just doesn't seem so tiny anymore.