Hertz Corp. faces more complaints that customers were arrested at gunpoint because of disputed reports that they stole the cars they’d rented, a problem the company’s new chief executive has been vowing to eradicate.

Lawyers suing Hertz say they’re preparing to file about 100 new claims, a move that would boost the total of false arrest allegations to more than 300 and complicate efforts to resolve a legal fight playing out in federal court.

The new claims are an early challenge for Chief Executive Officer Stephen Scherr, who took over in February and pledged this month that Hertz would change its practices to protect customers who’ve done nothing wrong from false arrests.

Currently, at least 230 customers say in court papers that Hertz improperly called in police, mostly while the company was haggling with them about overdue rentals. A small number of cases, including two new claims, allege errors by Hertz employees caused police to pull over innocent customers on suspicion of driving stolen cars.

In one of the new claims, a driver was stopped in Beverly Hills, California in February while on his way to film a music video, and a couple were pulled over in Texas in March while the driver was in costume for a renaissance festival, police records show.

Hertz files thousands of criminal cases against customers annually, according to court documents, claiming that the majority involve disputes about vehicles that weren’t returned on time and likely have been stolen. Drivers of cars mistakenly tagged as stolen say in lawsuits that the reports sometimes led to frightening encounters with police.

The lead attorney for customers is Francis Alexander Malofiy, a Philadelphia lawyer who has spent years fighting Hertz in court. He says many new clients have come to him in the months since news about the false arrest lawsuits became public.

The new claims will be filed in the next few weeks, Malofiy said. Most will land in front of a federal judge in Wilmington, Delaware, where the company reorganized in bankruptcy as the pandemic began to hurt the economy in 2020. Hertz left bankruptcy protection in June, but a shell company remained behind to resolve disputed debts, including false arrest claims.

Some of the new claims will wind up in various state courts because the incidents happened after Hertz left bankruptcy, Malofiy said. Lawyers for the drivers say all the cases could cost Hertz more than $700 million. The company said in a quarterly filing Wednesday it doesn’t expect a significant impact.

Hertz said in an emailed statement that it’s still investigating the two new cases, and they appear to be different from the bulk of the previous claims about late returns. Hertz Corp. is the unit of Hertz Global Holdings Inc. that operates the Hertz, Dollar and Thrifty rental brands in regions that include Europe, the Americas, Asia, Africa and Australia.

“In the event we have a made an error, we will work to make it right with any customer affected by our actions,” the company said. Meanwhile, it’s adding more technology and bringing in additional repossession agents and services “to diminish the possibility of innocent customers being impacted.”

Hertz said it tries to contact customers via phone calls, text messages, emails and certified letters about overdue cars and get them back through private means, working for about 63 days beyond the return date before involving police.

In the Texas case, Jeremy Benjamin, 35, and Brittany Morgan, 32, picked up a Ford Mustang from Hertz at Houston’s airport on March 9. Hertz apparently rented the car without realizing it had the wrong license plate, according to Larry Boggus, a police officer with the city of Memorial Village, Texas. The plate had been reported stolen off a Hyundai Sonata, which is why the car was stopped in the small community in the Houston area.

“Hertz probably just failed to check the license plate when they did the rental inspection,” Boggus said in an interview. “We’ve had several stolen rentals that were not really stolen.”

The couple, who live in Naples, Florida, said they were terrified to be confronted by police with drawn weapons a few days after getting the vehicle.

“As we were returning with the car, we were pulled over and arrested at gunpoint,” Morgan wrote in a legal declaration. “It was traumatic and humiliating. The police told us that the car was stolen.”

Music video director Michael Okoasia, 29, was pulled over in Beverly Hills while leading his film crew to a gig in Southern California on Feb. 5. He was alone in the Nissan Versa while the equipment and crew followed, Okoasia said in a sworn affidavit provided to Bloomberg News.

He was handcuffed and placed in the back of a patrol car as part of the stop, which involved 10 officers with guns drawn, according to the statement. The Beverly Hills police were alerted after an automated license plate reader scanned the vehicle, which had been reported stolen, according to a police report.

“I lost around $20,000 from the music video that we were not able to shoot,” Okoasia, who lives in New York, said in the affidavit.

In both cases, the people were detained but not charged. The couple in Texas were allowed to keep the car and continue on their way. The video maker was released, but the car was towed because it was reported stolen.

A small number of customers are arrested because the company can’t find a vehicle, according to court documents. In recent interviews, Scherr said such incidents are unacceptable and that policies were changed, adding that the falsely arrested customers are only a small fraction compared with the millions of cars Hertz rents.

The Florida-based car renter has tried to put the issue behind it, arguing the allegations apply only to the old pre-bankruptcy Hertz. “It’s not a new Hertz issue, it hasn’t been a Hertz issue for a while,” company attorney Christopher Shore said in court on Jan. 4.

 

Bloomberg’s Sridhar Natarajan contributed to this report.

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