Collision repair shops regularly decry the practice by some insurers of denigrating one shop in order to influence a consumer to select a shop in that insurer’s direct repair program (DRP). But could that DRP shop be found to be engaged in an unfair trade practice based on that insurer’s behavior? 

Eversman

       That was the type of question raised in late July at the Collision Industry Conference (CIC) by attorney Erica Eversman, chief counsel for Vehicle Information Services, Inc., an Ohio-based consulting company that specializes in issues related to vehicle manufacturing, sales and repair.

        Eversman said suits involving “unfair trade practices” are particularly popular with attorneys because they are relatively easy to prove and can involve such penalties as triple the damages.

        Defining what is considered an unfair trade practice can be challenging, Eversman said, because it can change over time. The term generally refers to consumer protections that prevent business practices that society deems “unethical” or “unscrupulous” but that may not otherwise be prohibited by a specific law.

        She said that not providing consumers with all the information they need to make an informed decision can be construed as an unfair claims practice. Just as a patient relies on a doctor not to withhold information about treatment options, she said, consumers generally also know little about collision repair and expect that fair trade protections will ensure they are given information they need to make any necessary decisions about what is done to their vehicle.

        “If it eventually comes out that you didn’t necessarily fix the car in their best interest because you were operating under some external agreement, those are things that society tends to have a problem with,” Eversman said.

        Misrepresenting the type of parts used in repairs is clearly an unfair trade practice, she said. And she personally believes such terms as “quality replacement part” could be an unfair trade practice.

        “Because consumers don’t know what the heck that means,” she said, “they don’t know that may mean they are getting aftermarket, recycled, remanufactured or rebuilt.”

        Predatory pricing, or charging less than your actual costs, is another unfair trade practice, Eversman said. She said she believes the “courtesy estimate” – one written by a shop based on photos or an estimate provided by another shop rather than on an actual physical inspection of the vehicle – would clearly be ruled an unfair trade practice.

        And because anyone who participates or makes an unfair trade practice possible can be held liable, Eversman said it’s conceivable that a shop in an insurer’s DRP could be viewed as liable if that insurer uses unfair trade practices to lead consumers to that shop and away from others.

        “Be fair. Be forthright. And compete based on quality, service and reputation,” Eversman recommended to those at CIC. “Know who your customer is. Know who your competitors are. And most impor-tantly, uphold your professionalism.”