Washington’s Kreidler Fines GEICO for Overcharging

December 21, 2011

GEICO, an auto insurer based in Maryland, has been fined $100,000 for a computer database error that caused the company to overcharge thousands of its Washington state customers.

GEICO is also refunding $7.5 million, plus 8 percent interest, to the 25,267 affected auto insurance consumers by the end of the year.

“A computer database error caused the problem, which the company reported to us promptly,” Washington State Insurance Commissioner Mike Kreidler said in a statement. “GEICO has also agreed to a two-year compliance plan that includes multiple audits.”

An additional $50,000 fine was suspended on the condition that the company abides by the terms of the compliance plan.

The refunds, many of which have already been paid, will average roughly $300. The company has been contacting active and former customers affected by the issue and expects to have all refunds paid by the end of the year.

On May 26, GEICO representatives self-reported the computer error, which resulted in 7 percent of the company’s Washington customers being overcharged for insurance between Aug. 24, 2009 and June 2011.

Fines collected by the insurance commissioner’s office are deposited in the state’s general fund to pay for other state services.

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