Monday, 02 July 2007 06:56

Protect yourself from lawsuits and Internet slander by disgruntled customers

Written by Dick Strom and Mike Orso
    History has proven that the larger and more prominent a shop and its owner, the easier target they   are for lawsuits and other attacks by disgruntled customers. Mike Orso, owner of Nick Orso’s Body Shop in Syracuse, New York, fits this description. He owns a large collision shop named after his late father, who owned and operated it for years before him. Mike has earned his place of respect in the collision industry, as president of the New York Auto Collision Technicians Association (NYACTA) and as a longtime member in good standing of the Coalition for Collision Repair Excellence (CCRE).

    “I don’t take much guff from anyone,” Mike said. “We call them like we see them.” His shop is completely non-DRP, and is classified as a Wreck Check post-repair inspection (PRI) shop. Their contracts are written by attorneys and the shop supports industry groups such as CCRE. Orso listens closely to legal analyst Erica Eversman and regularly refers to her website, www.vehicleinfo.com.
    Mike Orso is nobody’s fool, but in America that doesn’t make him or any of the rest of us immune to lawsuits, regardless of the size of our shop. What follows is a true story, well worth the read, concerning how the Internet has great potential to damage or totally destroy the business you have painstakingly built up over the years.
The “customer from hell”… in sheep’s clothing
    Even well-oiled businesses will occasionally have to deal with an unreasonable customer. You know the kind. It is typically the spouse or boyfriend of a customer who is trying to make himself out as more of an expert/hero than you. This often turns into abuse and Orso can attest to that.
    A hundred repairs go through your shop without a hitch. Then, somewhere in the repair process one of these seemingly content customers turns into ‘the customer from Hell!” We’ve all been there. We do a great repair, cover all the angles, and yet one customer just won’t take our advice or heed our warnings. Deep into the repair, backing out is sometimes not an option.
    After every best effort, the customer’s boyfriend or spouse jumps in with both feet where he has no right to be. A tiny speck or flaw can turn into all out war. Owing to the fact that every shop owner is only human, and that this trade has absolutely no ‘standards of repair,’ each shop sets its own standards, Orso said.
    Of course, there are some iffy areas in this industry, Orso continued. This includes questions such as how much caulking is too much or too little? If I pug weld a frame rail, am I really returning the vehicle to pre-loss condition? If I repaint a panel, is the film build equal to OEM? If I straighten any frame or uni-body component because an insurer won’t allow for a new part, am I following OEM instructions, or do I become liable? Do I have written proof on file of manufacturers recommended procedures? Once attorneys get involved in your business it’s too late to go back and make changes.
    Orso prevailed through a very expensive, time-consuming situation that every body shop should be prepared to face, and many have. The fracas surrounding this particular incident dragged on for four years and cost the Orso’s $50,000 in attorney fees and more than 400 hours of their time. It all started innocently enough as a simple warranty claim, which all shops get from time to time. Every conscientious shop owner takes care of a number of these on a daily basis, many having nothing to do with the repair, but we often go out of our way to ensure a happy customer.

How to thwart the ambitions of “the customer from hell”
    Orso offered some advice to safeguard against a similar situation that happened to him. First and foremost, he said, remember that your true customer is the one who legally owns the vehicle and can legally sign your repair contract.
    •    Never proceed with a repair without having in your possession a repair contract signed and on file with the true owner... not with a son or daughter and not with the spouse or boyfriend if the vehicle is not in their name. Remember that the insurer slated to pay the bill is not your true customer. If you talk to the insurer at all, have a signed authorization from the vehicle owner permitting you to talk to the insurer.
    •    Photograph every inch of the vehicle to be repaired. Keep all parts invoices and specifications. Keep factory recommended procedures pages and follow the guidelines. Use a “Notice of Deficiency” to document any insurance refusals, short pays, and the like. Repair or document every inch of damage, old and new (the only saving grace we had in our struggle with this customer was a well documented file). Even though we had jumped through every hoop before commencing repairs, we were still not suit-proof… no business ever is suit-proof.
    •    Have all your paperwork in order on every repair, as if every repair you perform will be legally challenged, and make sure you have insurance on customer complaints to cover defense costs. Make sure you have identity-theft insurance. Most garage policies have not caught up to speed with Internet cyber-scammers. You will never be completely loss-protected, but you can greatly narrow your exposure by taking these precautions.
    •    Buy every domain name that your business name and personal name fits into.  Purchase every ‘dot’, ‘net’, ‘dot biz’, ‘dot us’, ‘dot org’, … ‘dot anything’ that could have your personal or business name attached to it. Sites like www.godaddy.com have assistants who can help you. Also buy up the offshore domain suffixes such as ‘dot mobi’, ‘dot tv’, ‘dot ws’, and buy up web addresses with your name and shop name followed by words such as sucks, such as “joesbodyshopsucks.com.”
    Search engines today will redirect your customers to a website you may not own and your name could be on them with a simple search engine prompt. Good advice is to monitor Google and Yahoo or assign someone within your organization to check search engines weekly to catch and manage damage control as soon as it happens.
    Should you discover a cyber attack, instantly check www.whois.net to determine who is attacking you. It could be a competitor or an ex-employee with an axe to grind. “Who ever knew 10 years ago we would be fighting for the right to use our own name?” Orso said. “Ten years ago a friend in computer programming told me to buy every dot domain I could before some one else did. Unfortunately, I never thought that anyone would take my name and put up a site bashing me.”
    •    Trademark your name and/or your company name with the Federal Trademark Office. Internet law is Federal rather than State, so you have to go to Federal court to defend or pursue Internet cyber squatters. Those offshore ‘dots’ are International Law and you don’t want to go there. Federal Court by itself is a different and very expensive venue, and very few law firms know how to handle Internet law, forcing you to retain the services of expensive attorneys. Sooner or later even your best customer service practices will fail to satisfy certain customers. Every shop occasionally runs into an opportunist seeking money, revenge, or just a “pound of your flesh,” and the Internet is there to make it easy for them. Shops may also find themselves listed on an Internet gripe page or blog. If this happens there isn’t much you can do unless you have previously positioned yourself to not get tagged. There is no win against a customer and unless you follow these steps you have positioned yourself to lose. A good offense is always the best defense.
    •    Have all your paperwork in order and in total compliance with the laws of your state. The ultimate answer of some shops facing customer problems is to “buy back” the vehicle. But this practice could start you down a slippery slope to becoming a used car dealer. A better defense, as listed above, is to document, document, document. With many of the DRP contracts that shops have signed onto, shifting of liability, hold-harmless clauses, capping payments, and a multitude of other insurer-friendly policies contrary to good business practices ensure that DRP shops could be in for more of a ride in the future than that for which they bargained.

Slandered on the Internet
    The following is from Sheila Loftus’ CRASH Network (May 26, 2007), describing how the situation unfolded, and how it was brought to Orso’s attention:
    A case brought by Nick Orso’s Body Shop in Syracuse, N.Y., against a disgruntled consumer has been settled in favor of the shop. Karen Kiggins brought her ‘03 Toyota RAV4, which had been rear- ended, to Orso’s for repairs in August 2003. The driver who hit Kiggins was insured by Progressive, and there was a $10,000 liability limit on the claim. Although the damage to Kiggins’ vehicle exceeded this amount, she insisted that Orso’s do the repair instead of, in all probability, allowing her own insurer to total the vehicle. “Given our instructions, we did our best to work within the allowances in that we asked for specific items and documented each of Progressive’s refusals,” said a statement released by Orso’s. “But unfortunately, at the end of the day, [the Kiggins’] new car was still a ‘repaired car’ and that is a major hurdle for some people.”
    As a result, Kiggins and her husband sued Orso’s over the repair in January 2004. Frustrated by the slow pace of the legal proceedings, they launched a Web site, nickorso.net, which bashed the shop. It was nearly two years before one of Orso’s longtime customers noticed the site and brought it to the shop’s attention. Orso’s brought a lawsuit in Federal Court for trademark infringement, cyber-squatting, and defamation and the site was shut down.
    A portion of a press release relating to Nick Orso’s Body Shop struggle states, “Nick Orso’s Body Shop has reported a trademark infringement, cyber-squatting and defamation case which was brought to a swift close and was settled for an undisclosed amount.
    US Federal Court Judge Norman Mordue, signed an order in judgment against Kiggins regarding the trademark infringement along with a permanent injunction shutting down the nickorso.net site and any other links associated with it. The injunction also prohibits Kiggins from posting, writing or otherwise creating defamatory comments on any site. Kiggins is also permanently enjoined from future trademark infringement, or creating websites or postings involving Nick Orso’s. The order remains in place forever.” While the information above sounds straightforward enough, countless hours and many thousands of dollars were spent in the Orso’s defense.
    Mike explained that the discovery step of a legal proceeding is very costly, and that it would have been a very long and expensive step for him. “We think our customer’s husband got frustrated and found one of those rip-off sites that schooled him on how to proceed against us. Once he had his site up and we found out, we immediately took action in Federal Court. Then, the media was tipped off and picked up on the story as a freedom of speech issue. Many businesses are faced with issues; though some deserve it, ours didn’t. And we were as prepared as we could be. Eventually, damage was controlled, and it all worked out in our favor. I’m sure competitors and insurance companies with DRPs were enjoying the moment, since we are non-DRP and we run many consumer-based ads each month. But we are now powering through the experience.”
    Co-authored by Dick Strom of Modern Collision Rebuild (moderncol@ qwest.net) and Mike Orso of Nick Orso’s Body Shop (nickorso@prodigy.net)