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— A Ohio shop receives a $5,000 invoice for four laptops purchased using an Office Depot account established – in Alabama – using the shop’s name and federal tax ID number.
— A California shop owner receives a call from a credit card fraud department warning that the shop has processed multiple credits – but never any charges – on one credit card, subsequently tracked to the shop’s bookkeeper.
— A West Coast shop accepts payment from a customer in the form of a money order, presuming that it must be good since money orders must be paid for with cash, only to learn several days later the money order was counterfeit.
    In what is already a challenging industry, shops in recent months have found themselves the target or victim of a wide range of fraud and scams. The tough economic period the country now finds itself in is only apt to increase such illegal activity – and make it more important than ever that shops take steps to protect themselves.
    Here’s a look at some of the latest or most common ways businesses in the industry have fallen prey to the unscrupulous, and what you can do to avoid the same fate.

An Inside Job

Police last summer arrested the bookkeeper of a collision repair shop in Clovis, Calif., saying she embezzled $415,000 from the business. The shop owner said the woman worked at the shop, which has annual sales of about $3.5 million, for about four years. During that time, authorities allege, she would run credits of up to $1,000 a month on a personal credit card (a call from the bank about this activity is what alerted the shop owner). She also would indicate in the shop’s books that checks made out to herself were actually payable to shop vendors.
    “Because she balanced the checkbook, I never looked at the checks,” the shop owner said.
    He suspects the total amount he lost may be closer to $1 million.
    “It will take 10 years or more to make this back,” he said.
    One thing he now recommends: Conduct background checks before hiring. He said he had been unable to check the woman’s references because, ironically, her last two employers had gone bankrupt. But a background check would have alerted him she’d had some trouble in her past.
    Other internal fraud prevention tips: Sign checks yourself or review copies of checks each month. Make sure all checks are accounted for, including those damaged or voided. Compare accounts payable checks to vendor statements. Assign different people responsibility for writing checks and reconciling the account. Have bank statements mailed to your home.

Phony payment

One West Coast shop owner said an employee at one of his two locations accepted a pair of money orders, totaling nearly $2,000, from a customer for repair of a vehicle. The employee was under the impression that all money orders are good because you have to pay cash for them.
    Several days later, however, the shop’s bank returned the money orders as invalid. By calling the phone number for the business where the money orders were supposedly issued, the shop learned they were counterfeit.
     The shop owner said the fraud could have been avoided if the shop had done a better job verifying the identification of the customer and matching it to the money order and vehicle registration. Between the fake names, addresses, signatures and phone numbers given by the customer and on the money order, something should have raised a red flag, he said.
    He said his managers now know that any type of check or money order needs to be validated before a vehicle is released. Fake cashier’s checks also have been used in scams. So if something doesn’t seem right, ask the customer for cash, driving the customer to the bank, if necessary

Credit card fraud

At least two shops recently have reported receiving operator-assisted “relay calls” (designed to assist the hearing impaired) from a “Dr. Sherry Smith” who says she wants to get a vehicle painted. The caller offers to put $1,000 down on a credit card, but wants the shop to wire $820 to a shipping company that will deliver the car to the shop.
    Similarly, Alpine Autobody in Vancouver, Wash., earlier this year received a “relay call” from a would-be customer who said they were in an accident on the way to Texas and wanted to have the car towed back to the shop. The tow company didn’t take credit cards, the caller said, asking the shop to charge $3,500 to the caller’s credit card and wire the money to them near Texas.
    The Better Business Bureau of Northern Indiana cautions that such exchange of funds usually involves a scam using stolen credit card numbers.
    Sensing a scam when she took such a call, Muffy Revell of Sisk Auto Body in Owings, Maryland, said she contacted AT&T and the Federal Communications Commission about such a call the shop received last year and was told the calls often are placed via the Internet and thus cannot be traced.
    She did receive a packet of information from the FCC including its alert reminding businesses that they should not hang up on such callers (the Americans with Disabilities Act requires companies to make their services available to those with disabilities) but to take precautions when accepting credit card payments:
    —Be wary of cards that are not signed or lack the standard security features (hologram, 3- or 4-digit security code).
    —Consider asking for identification from anyone paying with a credit card.
    —Use the address verification service that card processors offer. This is particularly important when accepting a card payment over the phone. It allows you to enter the cardholder’s address in addition to card number to make sure it matches the account.

Nefarious vendors

It has been a few years since shops have reported this scam but in case you missed it: A bedliner company calls saying they will do the marketing and send the shop referrals if the shop buys its bedliner products from that company. The shop is soon told that a referral has come in for a fleet of trucks that will require the shop to pre-purchase a large order of material to perform the work. The fleet of trucks never show up, and the pre-purchased material ends up being not usable and/or unreturnable.
    Protect yourself by being cautious about those you choose to do business with, checking them out much as you would a new hire.

Protect your ID

Two shops in the same small town in Ohio say their companies’ federal tax ID numbers were fraudulently used last year to establish cell phone accounts or make purchases at national office supply chains.
    Dawn Hilty of Wingate Body Shop in Findlay, Ohio, said she received a call last spring from AT&T to confirm that her business was applying to purchase 25 cell phones. She received similar calls over the next week, learning someone was attempting to purchase a total of 100 cell phones.
    The following week, she received a letter from Staples saying it was denying her credit application (she had not applied) as well as an invoice from Office Depot for $5,224 for four laptop computers purchased in Montgomery, Alabama.
    Vanessa Boutwell-Dietsch at Boutwell Collision, also in Findlay, had a similar experience, getting calls about attempts to establish credit in her company’s name (using its federal tax ID number) at Home Depot and Cincinnati Bell Wireless, and receiving a Staples card showing the shop had applied for and been approved for a $5,000 credit line.
    Both women say they are out no money, but after hours spent on calls to the police, FBI, Federal Trade Commission, banks and credit bureaus, they now realize there is far less in place to protect businesses (as opposed to individuals using Social Security numbers) from such “identity theft.”
    Hilty said she eventually was able to get a fraud alert placed with Dun & Bradstreet. But she and identify theft experts caution businesses to protect their federal tax ID number by:
—not including it on estimates;
—limiting how many employees have it and ensuring they know how it is to be used or shared;
—not giving it out to callers without confirming who they are and that they have a legitimate need for it; and,
—shredding any documents to be disposed of that include it.

    There’s no way to protect your business 100 percent from a determined scam artist. But by following the advice outlined here, and helping your employees develop their own nose for deals that aren’t such deals, you can at least make sure the unscrupulous have to work as hard as you do in order to get at any of your money.

   

Steve Feltovich recalls some years ago walking into a large shop for which he was going to be doing some consulting work. Feltovich, who conducts estimating and other training as the manager of business consulting services for Sherwin-Williams Automotive Finishes, recalls that the manager of the shop said he needed a few minutes to finish up some projects but told Feltovich to feel free to walk around and check out the shop.

Dan Bailey was facing a situation that many in the collision repair industry have: how to handle the future of the family’s business.
 

U.S. shop owner Jeff Beavers was at a cross-roads. His 7-year-old company, Car Crafters Collision Repair in Blue Ridge, Georgia, had grown steadily to the point of having annual sales of just over $1 million – but was somehow losing money.

 

 

State Farm’s foray into parts procurement. Growing dissatisfaction with direct repair programs. “Underwritten” initial estimates by insurers. These were among the most talked-about topics in the industry this past year. Here’s a quick review of the year through a collection of some of the most memorable, important, interesting or enlightening quotes heard around the industry during 2007.

What do you get when you ask the industry to list what they see as the key issues they’d like to see addressed?


The leaders and participants of the Collision Industry Conference (CIC) conducted just that exercise in recent weeks, and ended up with a list of nearly 600 issues submitted by more than 150 representatives of the collision repair, insurance and related segments of the industry.

Saturday, 30 September 2006 17:00

CIC and I-CAR: Summer industry meetings

If you didn't attend the Collision Industry Conference (CIC) and I-CAR annual meeting, both held in San Jose, California, in August, you may have missed out on some useful news and information shared at the meetings.

Friday, 12 January 2007 17:11

Quotes of Note for 2006

State Farm's new 'Select Service' program; a Texas court's upholding of a state law banning insurer-owned shops; the increasing percentage of vehicles being declared total losses; and the ongoing battle over the "right to repair" were among the most talked-about topics in the industry this past year.

If refinish labor times on repaired panels are going to be adjusted from those in the estimating systems - something 96 percent of shops say they have seen insurers do - the printed copy of the estimate should show what the original labor time is.

A committee of the Collision Industry Conference (CIC) is taking a different approach to the long-standing battle between shops and insurers over "featheredge, prime and block" by defining where body work ends and paint work begins. 

Wednesday, 30 November 2005 17:00

CIC discusses increasing number of total losses

That notation on every paint can in your shop that says, "For Professional Use Only," may soon hold some real meaning according to early indications about rule-making currently underway by the federal Environmental Protection Agency (EPA). 

In its second year in its new home, the 2005 International Autobody Congress and Exposition (NACE) offered attendees about 75 classes, the return of the NACE welcome party, a keynote address by former New York City Mayor Rudy Giuliani, and the opportunity to attend two other larger automotive aftermarket trade shows also being held in Las Vegas.  

After last year's I-CAR 25th annual meeting, which very much focused on the training organization's successful history, this year's event focused more on the future than on the past 12 months, which one board member termed "its most challenging year ever." 

The multi-association task force created to address repairer concerns about how the estimating database companies operate reported on its early progress in April and defended its decision to include insurers in the process. 

Automaker efforts to limit repairs of some of their vehicles to shops that participate in the OEM's shop certification program drew some fire from attendees at the Collision Industry Conference (CIC). 

From "unintentional fraud" to "estimating database abuse" and the added costs created by the lack of standardization among direct repair programs, the Collision Industry Conference (CIC) plans to address a wide range of topics in 2004. 

At the last International Autobody Congress and Exposition (NACE) expected to be held anywhere other than Las Vegas, attendees had an opportunity in early December to enjoy a welcome party at Universal CityWalk in Orlando, Florida, participate in 45 educational sessions, hear a keynote address from news commentator Bill O'Reilly, and browse a 176,000-sq.-ft. trade show featuring 488 companies. 

The Texas law passed earlier this year that puts a halt on the growth of insurer-owned shops is nine pages long. 

Friday, 31 October 2003 17:00

CIC: parts have broad impact on cycle times

For shops or insurers looking to speed up cycle time, the types of parts used may make more difference than any other factor. 

Third-party "desk auditors" faced some critics and tough questions during a panel discussion at the Collision Industry Conference (CIC) held in Hollywood, Florida, in late July. 

Saturday, 31 May 2003 17:00

Salvage airbags, OEM info debated at CIC

The issue of reuse of non-deployed airbags from salvaged vehicles returned to the spotlight at the Collision Industry Conference in Phoenix in April with a panel discussion that included information on a program being developed to certify such airbag modules. 

"Working Small and Effective" was the title of a class at the International Autobody Congress and Exposition (NACE) in Dallas, Texas in early December, but it could have been an apt theme for the event. Many wondered whether NACE would "feel the impact" (the actual theme of the show) of the five major paint companies being absent from the trade show floor. Indeed, attendance by both shops and vendors was down. (For details, see "NACE by the numbers".) 

Used or "recyclable" parts were the focus of discussion during a number of other presentations at the Collision Industry Conference (CIC) held in mid-March in Nashville, Tennessee. 

Throughout the Las Vegas Convention Center the 35,000 attendees at last month's NACE seemed to be talking as much about the event itself as they did about the usual industry announcements, speakers and the "good deals" to be had on the trade show floor.

Sometimes the best way to look forward is to spend a few minutes looking back.
That’s a concept that came to mind recently looking through a file of industry-related notes and articles from 15 years ago. What can the industry today learn from the ideas and topics being discussed then? What has changed – for better or worse – and are there areas in which virtually no progress has been made? And what should we be doing differently now to ensure we’re not just treading water 15 years from now in 2022?

If you think the collision repair industry is changing rapidly, spend a little time talking with the owner of your nearby auto salvage yard:

Consolidation? Independent yards around the country are being gobbled up by larger corporations like LKQ Corporation and Ford Motor Company.

E-commerce and computer technology? Body shops can shop for used parts on-line at several websites, including iSalvage.com, NextPart.com, PlanetSalvage.com, and CarStation.com, and many yards are connected to each other by co-op networks such as United Recyclers Group.

Seemingly conceding that its previous position on estimating system data was untenable, ADP announced in April it was putting on hold its plan to encrypt that data and make it unusable by unlicensed third parties such as Internet claims management companies. 

Spend a few minutes talking to another shop owner —no matter whether he or she is across town or across the country —and you’re likely to hear about some concepts and ideas that are being tried – or have long been found successful. Here’s a compilation of some ideas, tips and processes successful shop owners have recently shared.

With the sluggish growth or even decline in sales many shops have experienced in recent years, the technician shortage and recruitment of employees have not been the troublesome issue they were for the industry during the late 1990s. 

Concerns about the estimating databases, the reversal of the decision in the State Farm non-OEM parts lawsuit, the collapse of another consolidator and an ongoing battle over the "right to repair" were among the most talked-about topics in the collision industry this past year.

There's a simple rule in business that if you want to increase profits, you need to either increase sales and revenue, or decrease costs and expenses. 

In the three years since "event data recorders" (often referred to as "black boxes") in vehicles really began to arise as an issue of interest for collision repairers, there has been significant activity related to EDRs on a number of fronts: 

Shop owners struggling to remain profitable say they are increasingly focusing on the paint side of the shop, looking for innovative ways to squeeze even more productivity out of paint booths, paint products and paint personnel. 

At first glance, it's hard to fathom what Eliyahu Goldratt, a 58-year-old Israel-born physicist, has to offer the collision industry. But more than 20 years after Goldratt authored (along with Jeff Cox) a "business novel" entitled "The Goal," his theory of process improvement is increasingly being discussed within many shop "20 groups" and implemented by a growing number of collision repair businesses. 

For anyone in this industry who started out hustling sales - whether that means collision repair jobs, cans of paint or tools and equipment - pulling back from a focus on growth in gross sales can be a challenge. Increasing the top line, after all, is often a key ingredient in increasing the bottom line. More sales equals more profit, right? 

If there was one key message at a recent gathering of auto recyclers from around the country it was that shops and insurers want an easy and reliable way to know exactly what to expect when sourcing used parts. 

Hiring a new employee can be tricky business. One West Coast shop owner found that out recently when within two days he suddenly found himself down three technicians. Before he could even get a 'help wanted' ad place, a man came in looking for work. 

Mark Cantrell, co-owner and general manager of McLeod Autobody in Kirkland, Washington, recommends that shop owners look for ways to save their employees just three-tenths of an hour each day. 

Here's your assignment: Pretend you have 45 seconds to talk about your business in front of a group of people you'd love to have as customers. Could you tell them something that's unique about your business, something that no other shop in your area could or is likely to tell them? 

Give some thoughtful people who are knowledgeable about the collision repair industry a chance to shine up a crystal ball and look into the future, and you're likely to hear some interesting things. 

During the 1980s and 1990s, association and seminar leaders frequently pointed to changes in vehicle technology that were putting a dent in the collision repair market. Daytime running lights, the third brake light and anti-lock braking systems (if drivers used them properly), they'd say, were among the key factors pulling accident frequency down. 

Rod Enlow joked that in mid-2005 as he became chairman of I-CAR's board of directors, it looked like it was going to be a fairly smooth and calm year for the training organization. The destructive forces of hurricanes Katrina and Rita turned out to be just one of the issues that ended up buffeting I-CAR during what Enlow now calls a challenging but successful year. 

One of the ways some shops are coping with what they are finding is decreasing profits in collision repair work is adding services beyond body work: mechanical work, detailing, and spray-on bed liners. 

Tuesday, 31 October 2006 17:00

SCRS state affiliate groups meet

In October, the Society of Collision Repair Specialists (SCRS) gathered representatives from more than a dozen of its affiliate associations across the country to exchange ideas and information on their groups' accomplishments and key issues. 

Hank Tarter jokes that if you're going to have a heart attack, the place to be is Keizer, Oregon, a community of 35,000 residents just north of Oregon's capitol city of Salem.

Probably everyone in the industry has heard some variation of the joke about wheels on toolboxes being the cause - or a result of - the high rate of turn-over among the industry's technicians.

Friday, 30 September 2005 17:00

Expanding your business - without DRPs

There's little doubt that much of the growth some collision repair businesses have experienced over the past decade has been fueled by insurer direct repair programs (DRPs). After all, the percentage of insurance-paid work handled through DRPs quadrupled - to more than 30 percent - between 1996 and 2002. Most major insurers are already well over that 30 percent mark - with some at 70 percent or more. 

Are you ready for the "personnel file" challenge? How well can you answer these questions: 

Monday, 31 October 2005 17:00

Part 2: what should be in a personnel file

An article in last month's issue outlined why maintaining personnel files is so critical - and explained some of the items that should not be kept in the files. 

Friday, 30 September 2005 17:00

Plan ahead to reduce the tax bite

Most people in the United States tend to associate the month of April with taxes. But in reality, there's a lot more you can do right now - prior to the end of 2005 - to reduce your tax burden come next April 15. 

A number of dealership service departments, independent repair shops and other automotive businesses that have been the victims of thefts in recent months are urging other businesses in the industry to take added steps to protect themselves. 

 ..and what men can learn from them

Attend any national trade show, conference or association event in the collision industry, and one thing is likely to become apparent: While men may still far outnumber the women, both the number and success level of women involved in the industry is growing rapidly.  

An article in last month's ABN discussed the value and importance of building a company's culture, a common understanding among all employees about "the way we do things around here." 

Whether you knew it or not, the odds are good that already today you've contributed in some way - positively or negatively - to your company's "culture." 

Thursday, 30 June 2005 17:00

A look back at some visions of the future

Back in 1997, an article compiled some thoughts about the future from various players in the collision repair industry. A more recent reading of the article proved interesting; some of the predictions were startling accurate, while others, in hindsight, were partially if not completely - and often ironically - wrong. 

Although the percentage of dealerships with body shops has declined over the past 30 years, a growing number of automakers are working to help dealership shops gain market share. How successful they will be remains to be seen, but independent shop owners would be foolish to ignore the threat - or possibly the opportunity - these efforts may offer. 

With the growing number of insurance company direct repair programs - and with many insurers processing an increasing percentage of their claims through such programs - it's easy to understand why some states are looking to put the brakes on "steering" of work by insurers.