Rental Car Companies Pay Settlements to Victims of False Arrest

If you were falsely arrested because your rental car company reported your vehicle stolen, you may be able to sue for substantial damages for false arrest and emotional distress. Customers are increasingly finding themselves wrongfully accused of auto theft after rental car companies negligently report their own vehicles as stolen. In many cases, the cars were never missing at all—companies fail to update police after a vehicle is located, or they mistakenly report the wrong car as stolen. These errors can lead to false arrests, jail time, and highly traumatic encounters with law enforcement. As a result, affected customers frequently pursue rental car false arrest lawsuits, often seeking millions of dollars to recover the significant emotional, financial, and reputational harm caused by these preventable incidents.

Filing a False Arrest Claim Against a Rental Car Company

When a rental car company reports a vehicle stolen — or fails to clear it — innocent renters can become targets of armed police stops, wrongful arrest, and detention. A well-supported claim for negligence, false arrest, and emotional distress can result in significant recovery, even if the renter was never charged with a crime.

If you or a loved one has experienced a similar incident, it is critical to act quickly to preserve evidence (rental agreement, police report, vehicle records). A prompt legal review can identify whether the rental company failed to meet its obligations — and whether you have a viable claim.

Police Footage of Avis Customer’s 2025 Arrest

Hertz Agrees to Pay $168 Million to 364 People

In 2002, Hertz has agreed [1]to pay $168 million to settle hundreds of claims from customers who were falsely accused of stealing rental cars. The settlement covers 364 people, many of whom were arrested, jailed, or held at gunpoint after Hertz mistakenly reported vehicles as stolen—even in cases where customers had paid for their rentals, extended their agreements, or already returned the cars.

NPR reports that the false theft accusations stemmed from serious internal failures, including poor record-keeping and delays in updating customer rental information. These errors led to traumatic encounters with law enforcement and, for many victims, lasting emotional and financial harm.

Hertz said it is “taking responsibility” and settling the claims to make things right, though the company continues to dispute that it intentionally did anything wrong.

The multimillion dollar settlement marks a major acknowledgment of the harm caused by these mistakes and underscores the importance of strong consumer protection policies—especially when corporate errors can lead to wrongful arrests.

San Diego Arrest Results in $350,000 Settlement by Payless Car Rental

In January 2023, Wisconsin residents Sheena and Cole Burie traveled to San Diego and rented a minivan from Payless Car Rental. Although the couple did everything correctly, the vehicle had been mistakenly left listed as stolen in a law-enforcement database. A prior renter had allegedly returned the car late, and although Payless recovered it, the company failed to notify police that the vehicle was no longer missing.

That oversight triggered a terrifying chain of events. While driving during their trip, the Buries were suddenly surrounded by multiple police vehicles conducting a high-risk stop. Officers exited with guns drawn, ordered the couple out of the minivan, and handcuffed both of them on the side of the road. For nearly an hour, they were treated as suspected criminals — all because Payless did not update its records.

Only after officers contacted the rental car company did police confirm that the vehicle was not stolen. The couple was released, but the aftermath was significant. Both described the experience as traumatizing, humiliating, and life-altering. In public statements, they explained that the emotional impact extended far beyond the incident itself and contributed to serious strain in their marriage.

The Buries filed a civil lawsuit against Payless Car Rental, alleging negligence for failing to clear the vehicle from the stolen-vehicle registry — a foreseeable and preventable error. A jury trial began in October 2025, but before testimony concluded, the parties reached a settlement. Payless agreed to pay $350,000, refund the rental cost, and issue an apology acknowledging its system failure.

Although Payless characterized the incident as an “isolated” mistake, the case highlights a broader national problem. False police reports by rental car companies have led to numerous incidents in which innocent renters are stopped, detained, and even arrested at gunpoint. These situations create real physical danger and long-term psychological harm. Courts have repeatedly recognized that renters placed in these situations may be entitled to substantial compensation.

New York Avis Customer Shows Shocked Driver on Police Body Camera

An NBC New York investigation highlights yet another alarming example of a rental car customer being treated like a criminal because of a false police report. In this case, a woman driving a legally rented vehicle from Avis was suddenly surrounded by sheriff’s deputies during a traffic stop. Body-camera footage shows officers approaching with guns drawn, yelling for her to shut off the engine and step out of the car. She was detained on the roadside, terrified and confused — until deputies realized the truth: the vehicle was never stolen.

According to NBC New York, the car had actually been removed from the national stolen-vehicle database eight months earlier, but the outdated police record still flagged it as stolen. As a result, an innocent customer endured a high-risk stop that could easily have ended in tragedy. NBC’s broader investigation found that this is not an isolated incident; there are hundreds of similar lawsuits nationwide involving rental car companies misreporting vehicles as stolen, failing to update law enforcement when cars are located, or simply losing track of their fleets.

For customers, these errors can lead to false arrests, public humiliation, reputational harm, and lasting emotional trauma. For rental car companies, they raise serious questions about negligent business practices and liability exposure. As these cases move through the courts, many victims are pursuing substantial damages for the harm caused by wrongful detention and false reporting. This growing pattern underscores the importance of strong consumer protections — and the essential role of litigation in holding negligent rental car companies accountable.

Contact us If you were Falsely Arrested

If a rental car company’s mistake led to a police stop, detention, or false arrest, you do not have to face the consequences alone. Our firm represents victims nationwide in claims against rental car companies for negligence and wrongful arrest. Contact us today for a confidential, no-obligation consultation.