Investigation Reveals Widespread Auto Fraud Continues in Calif.

February 4, 2002

A new investigation by the Bureau of Automotive Repair (BAR) reveals widespread billing fraud and repair defects have continued across California, according to the Los Angeles Times.

The 18-month investigation spawned last summer, due to escalating evidence of collision repair shop fraud against consumers and insurance companies.

Findings revealed 43 percent of cars inspected by investigators contained evidence of fraud, averaging $586 in overcharges for parts not used or labor not performed, amounting to a 20 percent charge attributed to fraud. The insurance industry pays out approximately $3.2 billion related to body repairs in California at the estimated rate of $2,843 a claim, according to industry figures.

Sen. Jackie Speier (D-Hillsborough) disclosed the preliminary results of the investigation to a state Senate Insurance Committee hearing. Speier noted how disturbing results were, since the inspection program was fairly publicized around the industry. BAR released a report in 1994 documenting reports of body shop fraud statewide, finding that 95 percent of shops lacked competence and properly trained technicians to perform reliable repairs. It further stated that 40 percent of repairs involved fraud.

BAR continues to note over 400 cases filed by investigators each year, involving collision repair shop fraud. In some cases, investigators revoke shop licenses, in others, criminal charges are sought.

BAR provides free inspections of repaired cars at the owners’ request. Of the 507 cars inspected under the program, 217 have been found with evidence of fraud, mostly by overcharging for parts not used or labor not performed. Additionally, 13 percent of the repaired vehicles indicated defective repairs to car frames.

Members of the auto body industry have disputed the claims, including the Calif. Auto Body Association, who maintains that the allegations by BAR are unfair and not supported by hard evidence.

Speier will construct her legislative agenda based upon the issues discussed in the BAR investigation, as well as the cessation of the sales of formerly wrecked cars being recycled for sale without salvaged titles.

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