Why Does Hertz Keep Falsely Accusing Its Customers of Car Theft? Lawsuit Claims Rental Giant Issued Arrest Warrants To Cut Costs


New Jersey contractor Hanna “John” Ayoub paid $2,309 to extend the rental of a Dodge Ram from Hertz Car Rental at the Wilmington, Del., train station in April 2019. Unfortunately, in a twist that isn’t as rare as one might think, the transaction resulted in three months of jail time for Ayoub – along with the loss of his home, business and tools – after Hertz accused him of stealing the truck.

“They said that they had no record of the extension on the vehicle despite speaking to them a day before and receiving confirmation,” Ayoub said. “Everything just turned into a nightmare from that point onward.”

Along with more than 180 former Hertz customers, Ayoub is now suing the company for $529.7 million in federal bankruptcy court. The plaintiffs claim that they were detained by police, arrested and sometimes sent to jail for “stealing” cars that they had legally rented. Hertz filed for chapter 11 bankruptcy protection in May 2020 to restructure its business and unload $19 billion in debt after the pandemic left the company with a fleet of 700,000 cars that nobody wanted to rent.

Hertz files roughly 3,365 stolen car reports on those who rented cars from the company each year. According to an Inc. report, Hertz released this number on Feb. 10 after the company lost a court motion to keep the records sealed to avoid a “competitive disadvantage.” The disadvantage Hertz is referring to is not that people might hesitate to rent cars from the company because of a potential theft charge. Instead, the company is worried that other rental car companies will use the information to figure out how it manages its inventory, the complaint alleges.

As Hertz VP Michael Severance put 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. 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.

However, bankruptcy judge Mary Walrath was not impressed, and she demanded that Hertz release the number of theft-by-conversion reports it files on customers.

Most of these alleged “thefts” happen when a rental customer decides to extend their rental. According to the lawsuit, when the customer calls Hertz to request the extension, the company places a temporary hold on the card the customer used to rent the car. If the hold fails to go through because the customer is close to their credit card limit or has yet to pay their bill, Hertz reports the car stolen “by conversion.”

However, unbeknownst to anyone other than Hertz, after the customer pays the bill and returns the car, the company does not withdraw the theft report, does not release the information to the public, and never notifies the customer that there was ever a problem. In addition, Hertz failed to validate and verify the information for arrest reports to reduce costs, essentially “letting the police find the cars it has lost,” according to the lawsuit.

That’s what happened in 2007 to Pennsylvania salesman Brent Williams, who rented a Ford Mustang from Hertz in Florida. After driving the car for two months, he was arrested for theft, even though he had proof that he had paid $600 a week to use the car. When no lawyer showed up to represent Hertz at the court hearing, Williams assumed that the matter had been dropped until 2016, when a trooper found the outstanding warrant for the theft of the Mustang when he pulled Williams over for a traffic violation in Pennsylvania. After he spent 30 days in jail the charges were finally dropped, but Williams received no apology from Hertz. “They kept me shackled the entire time,” he said. “It’s almost like being kidnapped.”

Hertz says it cares deeply about its customers, but apparently finds it less expensive to pay settlements than to fix a computer system that fails to track rental payments and instead lands dozens of customers in jail. Hertz insists that only a very small – “tiny, tiny” – fraction of its police reports results in the arrest of innocent people. However, lawsuits have been piling up against the company related to conversion arrests for over a decade, meaning that thousands of customers could have been arrested and jailed for no reason other than legally extending their rental agreements with Hertz.

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