Was Hertz Stock Affected by $168M False Arrest Settlement?
Hertz announced on Dec. 5 it had settled 364 claims — and would pay out $168 million — following a lawsuit against the company. The lawsuit in question centered around claims Hertz had allegedly falsely reported a sizable number of customer-stolen vehicles, which sometimes led to the arrest and imprisonment of innocent customers.
See: States Whose Economies Are Failing vs. States Whose Economies Are Thriving
Find: 5 Things You Must Do When Your Savings Reach $50,000
Shares of Hertz, down 34.4% year-to-date, were flat when the market opened on Dec. 6.
“Hertz stock has lost 52% of its value since peaking in early November 2021. I am amazed that Hertz was able to settle for so little money most of the charges of mis-reporting stolen vehicles leading to the false arrest of its customers,” said Peter Cohan, associate professor of management practice at Babson College and author of “Goliath Strikes Back.”
“Its CEO since February is a superstar Goldman Sachs banker taking his first swing at being a public company CEO. If he can clean up all of Hertz’s legacy operational problems and sustain its expectations-beating growth — Q3 revenue was up 12.1% to $2.5 billion — this stock looks like it could soar,” Cohan said.
According to one of the lawsuits, “Because of the false reports, Hertz’s own customers are wrongfully arrested (sometimes at gunpoint), thrown in jail, and prosecuted as if they truly committed grand theft auto.” The lawsuit added that Hertz’s actions “in knowingly and falsely reporting its own customers to the police represent one of the most striking instances of corporate malfeasance in decades.”
Hertz CEO Speaks on Settlement
As for Hertz, the company said that the settlement brings resolution to more than 95% of its pending theft reporting claims, according to an announcement.
“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,” Stephen Scherr, CEO of Hertz, declared in the announcement. “While we will not always be perfect, the professionals at Hertz will continue to work every day to provide best-in-class service to the tens of millions of people we serve each year. Moving forward, it is our intention to reshape the future of our company through electrification, shared mobility and a great digital-first customer experience.”
As GOBankingRates reported in April, a lawsuit against the post-bankruptcy and re-organized Hertz alleged years of “falsely reporting its customers for car theft, throwing them in jail on felony charges, prosecuting them, burdening them with criminal records that impact their livelihoods, and separating them from their family and loved ones.”
Take Our Poll: How Long Do You Think It Will Take You To Pay Off Your Credit Card Debt?
More: Hertz Increases Its Fleet With Acquisition of 65,000 Polestar EVs
This led to Democratic Sens. Elizabeth Warren and Richard Blumenthal asking for scrutiny into the company.
In a letter to Scherr, Blumenthal wrote at the time: “Each year, for the last four years, Hertz has filed more than 3,000 stolen vehicle reports with law enforcement. Many of those reports ultimately turned out to be inaccurate, resulting in false arrests of Hertz customers… Investigative reporting and court filings have both revealed that this is a practice staggering in magnitude and devastating in impact.”
More From GOBankingRates
9 Safest Places To Retire Abroad for Less Than $2,000 a Month
This article originally appeared on GOBankingRates.com: Was Hertz Stock Affected by $168M False Arrest Settlement?