Senators call for investigations into Hertz following CBS News reports of hundreds of customers allegedly being falsely arrested
Two U.S. senators are calling for the government to examine the practices of rental giant Hertz, whose reports to police of stolen rental cars allegedly led to the false arrests of hundreds of customers. The lawmakers cited CBS News' reporting as a catalyst for their calls.
Democratic Sen. Elizabeth Warren of Massachusetts, in a letter obtained exclusively by CBS News, is asking the White House Competition Council to study consolidation in the rental car industry, saying it "has caused rising prices and diminished services for consumers."
In her letter, Warren pointed to Hertz customers who were allegedly "repeatedly arrested for driving rental vehicles the company accidentally reported as stolen." She called it a "disturbing pattern (that) has led to traumatic experiences, job losses and even jail time for customers."
Warren cited examples from a CBS News investigation into the alleged false arrests, including "a NASA employee who was arrested at gunpoint in Florida and a real estate agent who lost her professional license for a year."
In an interview with CBS News, Democratic Sen. Richard Blumenthal of Connecticut, who chairs the Senate's consumer protection subcommittee, called for a government investigation into the false arrest allegations. Blumenthal called CBS News' reporting "powerful and important because it has revealed a practice, a pattern of wrongdoing that is absolutely staggering in its magnitude."
In response to Blumenthal's comments, Hertz said in a statement to CBS News, "As we have previously said, Hertz cares deeply about our customers and successfully provides rental vehicles for tens of millions of travelers each year. As it relates to the claims made against the company, we are committed to doing what is right by our customers, while also continuing to protect and defend against activities intended to cause harm to Hertz."
The false arrest claims of former Hertz customers were filed in federal bankruptcy court in Delaware. The claims have been placed on hold until the company's bankruptcy case is completed. The judge overseeing the bankruptcy case is currently considering how many of the roughly 230 people who filed claims will be allowed to pursue their cases against the rental company.
Hertz in the past has said that virtually all of the claims of false arrest are "meritless" and should not be allowed to proceed. The company filed bankruptcy in May 2020, citing the pandemic and massive debt. Its reorganization plan was approved in June of last year.
Hertz attempted to seal information relating to the number of police reports it had filed against customers, but after CBS News filed an objection, the judge ordered those records disclosed. The company then revealed it had filed an average of more than 3,300 theft reports against customers each year, for a period of four years.
Hertz told CBS News it has not seen or received Warren's letter and therefore the company is not in a position to comment.
The company has previously said that the "vast majority of these cases involve renters who were many weeks or even months overdue returning vehicles and who stopped communicating with us well beyond the scheduled due date." Hertz claims that "situations where vehicles are reported to the authorities are very rare and happen only after exhaustive attempts to reach the customer."
One of the attorneys representing the claimants in bankruptcy court, Francis Alexander Malofiy, has accused the company of turning legitimate renters into criminals.
"They've been aware of this for years, and instead of doing the right thing and addressing it, they're trying to sweep this under the rug, even through bankruptcy", Malofiy said.
One of Malofiy's clients, James Tolen, told CBS News in November that a surprise traffic stop in Houston in late 2020 turned into a frightening police encounter that made him fear for his life. After completing a project for one of the customers of his renovation company, Tolen was heading home on Dec. 23 in a pickup truck rented from Hertz.
He and his fiancée, Krystal Carter, who is also a claimant, said they had rented from Hertz about a dozen times in 2020 — but that didn't prevent him from being stopped by police for driving a car reported stolen by the company. Around 10 p.m. that night, he said police pulled him over and ordered him out of the car over a loudspeaker, telling him to lift his shirt and back up toward them.
"As I turn around, I see both officers train the guns on me," Tolen told CBS News consumer investigative correspondent Anna Werner.
"It was just terrifying. It was bad. Actually, I was really thinking that I wasn't gonna make it home," he said.
Tolen said officers handcuffed him, then told him he was driving a stolen car.
"I was like, 'That's impossible. I rent from Hertz. I'm a contractor,'" he recalls telling police.
Tolen begged the officers to look at his rental contract, in which he said he was listed as an authorized driver. He said that after seeing the document, one of the officers called Hertz and confirmed Tolen had a valid contract. He said the officer then told the Hertz representative, "We're gonna give him back the vehicle and you guys need to get a better system. This guy could have lost his life."
Carter and Tolen said they later found out the truck they rented had been reported stolen by Hertz three months earlier.
"I was hot. Hot," Carter said. "Like, we rented several times from them that year. Several."
CBS News also found that in a similar case in 2019, a South Carolina plaintiff's attorney asked Hertz whether there were any other lawsuits against the company for false arrests and similar claims. Hertz then provided the attorney with a database that he said contained over 300 claims, filed from 2008 to 2016.
"I was astounded by the number in just eight years," the attorney, Fritz Jekel, said. CBS News was unable to see the database because Hertz marked it confidential, keeping it secret from the public.
Hertz declined to answer questions about the database.