Hertz to pay $168 million after customers were falsely accused of stealing cars
Hertz said it will pay roughly $168 million by the end of the year to settle the majority of the lawsuits brought against the rental car company by some of its customers who were wrongly accused of stealing cars they had rented.
In April Hertz CEO Stephen Scherr, who took over the role in February, said that he was working to fix a glitch in the company's systems that led to the incidents.
Hertz Global Holdings said Monday that the settlement of 364 pending claims related to vehicle theft reporting would bring resolution to more than 95% of the pending theft reporting claims.
"As I have said since joining Hertz earlier this year, my intention is to lead a company that puts the customer first. In resolving these claims, we are holding ourselves to that objective," Scherr said in a statement.
Hertz anticipates recovering a "meaningful portion" of the settlement amount from its insurance carriers. The Estero, Florida-based company doesn't expect the resolution of the claims to have a material impact on its capital allocation plans for the balance of the year or for 2023.
Hertz filed for bankruptcy protection in 2020, as it struggled under heavy debt and a drop in travel caused by the pandemic. It operates Hertz, Dollar and Thrifty car-rental brands.
After Hertz emerged from bankruptcy protection in 2021, a CBS News investigation found that hundreds of Hertz customers had alleged they were falsely arrested — and in some cases jailed — because the company reported the cars they had rented as stolen.
One Hertz customer, James Tolen, said a surprise traffic stop in Houston in late 2021 turned into a frightening police encounter that made him fear for his life. He claimed officers 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 at the time.
The allegations subsequently led two U.S. senators to call for an investigation into Hertz.