Long time readers know that I have a hate/hate relationship with car rental agencies. The glaring exception to this is National Car Rental and if I have one piece of advice every traveler should follow it is: Join National's Emerald Club and never rent a car from anyone but National unless it's a dire emergency. If National has no cars available, consider flying into another airport when cars are available or rescheduling your trip until they do. (That last sentence is only partially tongue in cheek.)
The corporate culture at every other car rental company is aggressively adversarial. Whether it's misleading you into buying add-ons or scaring you into insurance you don't need or charging you for damage you didn't cause -- they are looking for ways to squeeze you and slap you. They do this not because it is especially profitable, but because their culture teaches them that their customers are either easy marks or dishonest cheats. Despite my jaded view, I have to admit, the recent actions from Hertz surprised even me in its outright contemptuousness.
Hertz's (reasonable) policy is that cars that are not returned in the time frame expected get reported to the police as stolen. Now I am sure even Hertz doesn't report a car stolen as soon as it's late. There is probably a grace period, during which they expect you to contact them and/or they try to contact you, but after that, yeah, the car is effectively stolen.
Well it seems our friends at Hertz had what they are calling a "computer glitch" that ended up having them report legitimately rented cars as stolen. Imagine tooling around in your rented Hertz -- having been scammed into an upgrade and liability insurance despite already being covered by your American Express -- when you get pulled over, arrested, and even jailed for auto theft. It was not just one or two cases. There were three hundred and sixty-four claims against Hertz for this in a class action lawsuit.
Now, I work in technology so I know the kind of bad situations "computer glitches" can get you in. And I am not someone inclined to decry big corporations needlessly. They are, in fact, easy targets. They are risk averse, vulnerable to PR assaults, and easy to demonize because there is never a human face to them. Still, I can't help but wonder how this "computer glitch" was left in the wild for so long without somebody saying, "Maybe we should do a manual review before we report cars stolen and have our customers thrown in jail until we get the glitch fixed."
The lawsuit itself calls that out (not manually reviewing stolen car reporting) as an act of corporate malfeasance. And it goes one better, claiming that in some instances, when confronted with a false report, Hertz actually backdated the documentation to make it look like the customer was at fault. Here is a good summary. If that is true, it's outright fraud.
Perhaps we will never know the truth since Hertz has settled the cases (or at least "most" of the cases) for $168M. My advanced math skills tell me that is well in excess of $450k per claim, which suggests they really, really didn't want this to go further.
On the one hand Hertz has been a mess. They filed Chapter 11 during the pandemic and have settled other class actions brought against them including not paying overtime, false claims of damages, excessive toll fees, and more. You'd think they were a hair's breadth from folding. Then it turns out, they just arranged to buy a 100K Tesla fleet for $4.2B. Da hell?
By the end of April 2020, Hertz was missing lease payments on its fleet. On May 18, Kathryn Marinello stepped down as CEO. Four days later, on May 22, the company filed for Chapter 11 bankruptcy, listing $18 billion in debt. Shortly after that, famed activist investor Carl Icahn sold his entire 39% stake in Hertz for a mere 72 cents per share, taking a $2 billion loss.
Then, a funny thing happened. Retail investors started flocking to Hertz stock. Some were driven by a belief that the Hertz brand could eventually sell for enough to return some value to equity holders. Some were driven by pure speculation. Whatever the reason, the result was that Hertz shares soared 1,000% in the span of two weeks, climbing from as low as 59 cents per share up to $5.50.
Covid taketh away and then Covid giveth right back. Bankruptcy law is a strange thing. You would think going bankrupt would mean destruction, but it often means the opposite. You get a clean slate financially and your lenders have to eat it. The adage "If you owe someone $100 and can't pay you are in trouble, but if you owe someone millions and can't pay, they are in trouble" is very, very true.
Those financial machinations may bring profit. It's possible they will attract a whole demographic of retail renters with the offer of Teslas instead of Chevy Malibus. But if there is any justice, it will be short lived unless they change their behavior toward their customers. "I got falsely arrested for auto theft and thrown in jail, but at least I was driving a Tesla," said no one ever.
In contrast, think of the disaster Southwest Airlines just went through. They, like Hertz, have a lot of fundamental problems but they are generally well-liked by their customers. Speculation currently is that Southwest will weather the reputational storm. People are forgiving if they don't think you're malicious.
The moral of the story: join National Car Rental's Emerald Club.
