Antagonism and Arrogance
Most of us are taught that business should be about providing a product or service in return for a reasonable profit. It seems that in some circles an entirely different set of aspirations and rules are being taught.
This post isn’t really about car rental company Hertz. They are just one small piece of something much larger.
What’s Happening with Hertz?
A while ago, I mentioned that Hertz recently crossed a customer who knows exactly how to shred a company that mistreats her. She’s Kate Klonick, a professor on the law school faculty at St. John’s University. About their violation of her car rental contract, efforts to wring extra money from her, subsequent repeated mishandling of the entire incident, and clues that what happened to her wasn’t unusual, she said, “I suspect this is a fraudulent business practice.” Most people would simply be furious. After she got through the travel she needed to do, she went after them seriously. We’re talking small claims court, Better Business Bureau, New York Department of Consumer Affairs, and “any federal and state equivalents.” Oh yes, and she laid out the entire tale for all to see on Twitter where it went viral.
Did you notice I mentioned Klonick came across clues suggesting what happened to her was part of a pattern, not a one-off mistreatment? And there’s more.
Herbert Alford was convicted of second degree murder in 2016. What’s wrong with that? He was renting a car from Hertz at the Lansing, Michigan airport minutes before the murder occurred. He couldn’t have committed the crime. But Hertz sat on the timestamped receipt needed to prove his alibi. Despite court orders and subpoenas, Hertz did not provide the receipt Alford’s lawyers needed until 2018, more than two years after it was first requested. By the time the conviction was overturned and Alford was released, it was 2020 and he had been wrongfully imprisoned for about five years.
But Hertz more often sends people to jail directly. The company files over 3,300 police reports each year alleging that customers stole the cars they rented. Most instances occur after a customer extends a rental and when Hertz initiates a temporary “hold” for payment on the customer’s credit or debit car, the hold doesn’t process normally. After the customer pays and returns the car, Hertz does not retract its theft report with the police.
Customers are typically unaware that any of this happens until the arrest warrant turns up in a background check months or years later, or they are arrested and jailed for “stealing” the rental car they paid for and returned.
A lawsuit filed by 220 such customers is seeking to unveil details of Hertz’ anti-theft processes. Hertz tried in court to keep the scale of its theft reports secret. Their reason? It has nothing to do with trying to salvage the company’s reputation or keep customers from being wary of them. A company vice president told the court they don’t want other car rental companies to be able to use their number of theft reports to figure out how Hertz manages its inventory.
U.S. Bankruptcy Judge Mary Walrath decided that wasn’t a valid reason to keep secret the number of these theft reports Hertz files. Now everybody knows about these theft reports, that customer claims against the company about this go back to 2008, that there have been 3,365 per year and therefore as many as 47,000 customers may be affected.
Naturally, my first response upon reading all this news is that I don’t want to even consider renting from them the next time I need to rent a car.
Beyond Hertz
But there’s more to it, isn’t there?
The pandemic hit. Travel practically halted for most people. People weren’t renting cars. Most car rental companies borrow money to buy the cars they rent out. If they can’t rent the cars, they don’t have revenue coming in to cover the payments they owe on their loans.
Like many other car rental companies, Hertz went bankrupt. That’s why the aggrieved customers had to petition a bankruptcy court to seek redress for their wrongful arrests and wrongful imprisonments.
Hertz is working its way through bankruptcy and still feels comfortable behaving this way.
We grumble among ourselves about mega-sized companies that seem to feel they can wring money out of people and businesses and government agencies and non-profits in any way they want. Anti-monopoly punishment against them can probably be quashed in court by their armies of expensive lawyers, and any punishment that does get levied will hardly make a dent in their profits.
Although it’s in the Fortune 500, Hertz isn’t one of those mega-sized companies; yet even while under the supervision of a bankruptcy court, it has that attitude.
When I think about it, so do an awful lot of other companies that are pretty big but not megaliths.
Past as Prologue
History has seen a similar pattern before. Whenever wealth becomes about as concentrated at the very top as it is now, this happens. Those who are part of the top start behaving as though rules and norms and limits don’t apply to them. Think of the Gilded Age and you’ve got the idea.
From Thomas Piketty’s Capital in the 21st Century (disclosure: this is an affiliate link), we also know what comes next: a massive reset. It isn’t always war or revolution, but often is. French Revolution. Bolsheviks. The immense reset of the two world wars…
Over the past few years, the concentration of wealth at the very top moved distinctly into the range that Piketty’s data shows shortly before a number of major resets. We have no way to reliably predict how and when the impending reset will unfold.
We do know that each reset shakes some wealth out of the very top, down to the middle layers of society. Whatever shakes out of the money tree generally doesn’t drift all the way down to the bottom. But the very wealthiest do not hold onto everything they have now.
The Hertzes of the world, and Alphabet (Google), Facebook, Microsoft… the companies at the very top and the people to whom their wealth flows… are due for a shock. It’s an interesting time to be antagonistic and arrogant toward the people to whom the reset usually directs its redistributions.