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Option 1: comply with LE+owner's request; they have a chance to recover vehicle; costs are low and bad PR is avoidedConsequence 1b: you released tracking information to a stalker. They fooled your rep into thinking police were involved. Not only do you have a PR nightmare, you've also opened yourself up to legal liability.
I'm not arguing this is the right balance. Finding that balance depends on branding, legal and financial factors. But it's not an unreasonable position.