CA study says 43% of body repairs involve fraud

Sunday, 31 March 2002 09:00

CA study says 43% of body repairs involve fraud

Auto body shops in California continue to get a black eye as the Bureau of Automotive Repair's (BAR) reinspection program picks up steam. A preliminary report issued in late January showed that 43% of cars inspected so far had evidence of fraud, with an average of $586 in overcharges for parts not used or labor not performed. BAR says that it has already inspected 507 vehicles and found evidence of fraud in 217, most often billing for parts not used or labor not supplied.

Dan Povey, manager of BAR's auto body program told the Los Angeles Times that 13% of the inspected vehicles had defective frame repairs based on visual inspection of welds and rust-proofing. BAR has not yet put vehicles on frame racks to measure them, but Povey said "You can bet there is a high percentage of (frame) misalignment."

Speier

The results were disclosed in the State Senate Insurance Committee hearing on January 30, chaired by Sen. Jackie Speier (D_Hillsborough) who introduced the legislation offering the reinspection service to consumers who request it (phone 866-881-1332) and requiring that insurance companies put in place a program for reinspecting a small percentage of all the repairs they pay for. The insurance industry says that it paid about $3.2 million for collision repairs in California last year and put the severity per claim at $2,843.

"They (BAR) are uncovering big problems," said Speier in an interview with the Los Angeles Times. "There is a systemic virus that is plaguing the repair of vehicles in California. It is alarming, since it is fairly well-known in the (auto body) industry that this inspection program is happening." Speier indicated to the LA Times that she intends to sponsor more legislation to improve consumer protection involving auto body repairs as well as the largely unregulated trade in rebuilt salvage vehicles. She acknowledged, as she has in the past, that insurance industry pressures on body shops to cut repair costs has lead to cost shifting and other types of fraud.

The California auto body fraud story has gained national exposure on the CBS Evening News with Dan Rather, which did a two-part series on fraud in auto body repair. The CBS story was based largely on the almost five year-old BAR report that found fraud in 40% of repairs. One BAR investigator, Warren Samm, was quoted on CBS as saying that he found fraud in as many as 90% of the cases he investigates today.