Heading into the first week of December, rental car company Hertz announced they would pay approximately $170 million to settle several hundred false theft claims involving their customers. In the news release, the rental giant specified they settled 364 shares, which resolves at least 95% of their open cases.
As the lawsuit describes, customers were getting pulled over and arrested—and even prosecuted—on claims they had stolen Hertz vehicles because the rental company could not locate them after they had been returned (which is also supposed to close the rental contract). There were also a handful of cases with confusion or other complications regarding returns, extensions, and payments of Hertz rental vehicles.
This is probably not how Hertz CEO Stephen Scherr had hoped to spend his first year in the role, though he was aware of it as he took the helm in early February. Accordingly, he said it is a top priority to do right by those customers who, rightfully, feel they have been mistreated.
He commented that the company intends to demonstrate how they want to put the customer first. This settlement is the beginning of holding themselves accountable and on track to achieving this particular and necessary objective. Specifically, he touches on the fact that the company has implemented new policies aimed at mitigating—if not entirely removing—the risks that precipitated this issue.
Hertz said they will pay out roughly $168 million by the end of the year to resolve most of the pending claims. The company has also said that they expect to recoup a substantial [enough] portion of the total settlement amount from their insurance providers.
Furthermore, the company also stated they do not expect the settlement(s) will have a “material impact” on their capital allocation plans for the 2022 and 2023 fiscal year balance sheets. That means the payment should not affect or interfere with their anticipated business investments. This is important because the company filed for bankruptcy in 2020 and had been trying to hold up the cases in bankruptcy court, but the settlement will allow everyone to move forward.
