Two auto-insurance trends bear watching

Public outreach can deter “crash-and-buy” schemes and auto giveups

The first trend is news from Maryland that “crash-and-buy” schemes are growing in the state. More people are opting to go without auto coverage, then buy a policy after an accident and file a false claim.

No one knows the frequency of “crash-and-buy” scams, but they probably happen more than we think. These crimes aren’t even prosecuted criminally in many states. Insurers sometimes discover the fraud before the claim is paid, so no money is lost. There’s also little chance of getting the money back when the insurer pays out a dishonest injury or collision claim, so honest policyholders take the hit in higher premiums.

Maryland is going after these scammers with tough civil fines. And to help deter the crime, the state has posted a video on what can happen to cheaters who get caught. Aggressive public outreach helps deter ordinary people from committing scams like “crash and buy,” research suggests.

The other trend is the growing length of car loans. Six-year loans are now the norm, and seven and eight-year loans are becoming popular, a recent report says. With the boom of new-car sales, tens of thousands of car owners likely will be underwater with their car loans four or five years from now.

With loan balances greater than the value of their cars, many drivers will have a powerful incentive to dump their vehicle. Torch it in a vacant lot, sink it in a canal or hide it in a garage somewhere. Take your pick, but insurers will buy a lot of these cars back a few years from now.

This crime also can be deterred through aggressive public outreach. If owners know the severity of this crime and the stiff consequences, they may think twice before unloading their unwanted vehicles on their insurers — and fellow policyholders.

We should start now to create this ounce of prevention.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Let’s get creative with fraud sentences

Make Major League star speak out against insurance cons

Much of the public knows that former Major League Baseball star Ted Lilly recently was charged with insurance fraud.

He crunched his $200,000 RV in a collision, incurring $4,600 in damages.

Lilly was uninsured for the damage and quickly bought a policy. Then he lied to his insurer that the crash happened after the purchase so the damage would be covered.

Lilly played for several teams and reportedly earned $80 million-100 million dollars in his career. It’s incredulous that a wealthy and famous athlete would try to get away with this scam.

He could’ve spent several years in jail, yet reached a plea deal with the San Luis Obispo district attorney’s office that avoided hard time. Part of the deal included 250 hours of community service.

And that’s the rub. I found no news stories that described what kind of community service he’d perform. Does it include speaking to organizations and groups about insurance fraud and why it’s a dead-end street? I raised that question with the San Luis Obispo DAs office.

Community service was open-ended, the office said. So there’s no clear definition of what Lilly was supposed to perform.

I’m fine if he has to coach youth baseball teams. Those boys and girls would learn a lot from a former ballplayer of his caliber. And he also should speak to school or community groups about why insurance fraud is wrong and how it messed up his life.

Innovative sentences like this can have greater impact than jailtime in many cases. Having convicted fraudsters talk eye-to-eye about their crime goes farther than all the stats and anti-fraud quotes in news stories.

So let’s make fraudsters like Ted Lilly spend quality time working to make consumers — young and adult — four-square against this crime.

Thus we can turn Lilly’s regretful act into a positive. It can a springboard for a wider dialogue on creative sentences for insurance crimes.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

More states taking on vehicle rate evaders

Drivers falsely registering in states with lower premiums

Dishonest drivers are ginning the auto-insurance system by illicitly registering their vehicles in states or counties with lower auto premiums. These cheaters may not drive or live there, but dishonestly setting up the address can save them a bundle on auto premiums.

This insurance scheme may cost honest consumers and the insurance system millions of dollars. And in some jurisdictions the drivers are committing insurance fraud.

Years ago the then-Philadelphia DA offered amnesty for dishonest drivers to step forward and properly register their vehicles in Philadelphia instead of their falsely claimed addresses in the Philly suburbs or southern New Jersey. A number of folks set their registration record straight — including an employee in the DA’s office.

More recently, North Carolina knew it had a problem with out-of-state drivers registering in the Tar Heel State. North Carolina now requires drivers to show proof of residence before they can register and insure their vehicle.

Several weeks ago the New Jersey Assembly passed a bill targeting drivers who lie about where they garage their vehicles. The state would gain more authority to go after these insurance cheaters if the bill becomes law.

New York has seen insurance investigators, consumer and community groups identify numerous suspicious vehicles parked in residential neighborhoods in Staten Island and Brooklyn. The vehicles oddly had license plates from Virginia, North Carolina, Pennsylvania and Iowa. Visiting friends or relatives don’t own these vehicles. They’re driven by New Yorkers who are cheating the insurance system.

An agent also may be helping New York drivers register vehicles in a state hundreds of miles away, confidential sources say. These drivers are cheating the system. They are raising the insurance risks and possibly auto premiums in the target state. They also are paying lower auto premiums without lowering the insurance risks in New York.

Neighborhood groups, anti-fraud groups and some legislators would like to make false vehicle registering a crime of insurance fraud in New York. A bill awaits action in Albany.

Most states have yet to make illegal registering a specific insurance crime. For the most part, we’ve also seen only sporadic enforcement. Still, more auto insurers and states are starting to realize that false vehicle registering can lead to other insurance crimes such as bogus vehicle injury or theft claims. Stopping rate evasion thus can help in the larger fraud fight.

States should step up and realize that rate evasion is an insurance fraud that needs targeting. It’s good for honest consumers and the insurance system.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

 

Home-grown scammers causing plenty of trouble

Mobster’s reputed auto cons show America can create its own defrauders

“I live my life to cheat insurance companies — my high every day is to cheat insurance companies.”

That’s the motto of reputed Philly mobster Ronald Galati, say accomplices arrested in a widespread sweep yesterday. A grand jury in the city of Brotherly Love indicted 41 yesterday for allegedly staging auto crashes and faking damage to previously banged-up cars. Galati and his body shop collected millions from insurers in the scam, prosecutors say.

Investigators say Galati even had shop employees gather and store deer blood, hair and carcasses as props in photos later submitted with claims to insurers.

Participants in the long-running scam include body-shop employees, tow- truck operators, a city cop and two insurer adjusters — plus Galati’s wife, son and daughter.

Galati, an auto mechanic at American Collision, Inc., had strong mob ties and was out on bail for allegedly masterminding a triple murder-for-hire plot against men he believed had testified against him involving the insurance plot?

Much of organized crime involving insurance in America focuses on immigrant groups — Russians in New York City, Armenians in Los Angeles,  Dominicans and Cubans in Miami, and Nigerians and Somalians in Houston.

This case reminds us that we still have home-grown gangsters likely defrauding insurers and their policyholders in every major city. Our work in exposing their crimes must remain vigilant — wherever they hail from.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Protecting airbag protection

States debate making airbag scams a specific crime

nullLast December at the Coalition’s annual membership meeting, a Tennessee federal prosecutor detailed how his office investigated and prosecuted a Chinese national who was manufacturing counterfeit airbags in China and selling them in the U.S. It was a shocking story how compromised auto-safety equipment was produced and distributed that could cause serious injury or death.

Since then, three states have picked up on this public-safety issue and moved on legislation setting criminal penalties for marketing and knowingly installing the phony airbags during vehicle repairs. Bills in Connecticut, New York and Ohio are nearly identical. They would send a clear message that knowingly using knockoff airbags will be met by the long arm of the law.

The Coalition has been concerned about airbag theft and fraud for several years. It’s an insurance swindle because insurers unknowingly pay full fare for low-dollar knockoffs installed at repair shops. But most important is the threat to people’s safety and lives.

Airbags are supposed to protect motorists from serious injuries or death. We have every right to expect airbags will indeed protect us. Counterfeit or non-functioning airbags place that expectation in jeopardy. In fact, motorists have died in crashes involving nonfunctioning or removed airbags.

We have worked to strengthen state laws protecting consumers. We worked closely with the National Conference of Insurance Legislators in crafting a model airbag theft and fraud law that is a comprehensive approach to the issue.

This latest trend in the marketing and installation of counterfeit airbags must be addressed. We applaud Connecticut, New York and Ohio for working to criminalize this life-threatening swindle, and are working to ensure bills will be enacted in the coming weeks.

The Coalition will work to see other states to join the bandwagon in this legislative session and the next one. It’s time to deflate airbag scams once and for all.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

Towing & repair scams: Road to nowwhere

blogA workshop on towing fraud at this week’s annual conference of the Pennsylvania Insurance Fraud Prevention Authority serves as a reminder that we all need to be vigilant to potential schemes that can cause big headaches and empty our wallets.

First the disclaimer — most tow-truck operators are decent, hardworking folks trying to make an honest dollar. So are the body shops that received damaged vehicles.

But scams are a big-dollar business [something missing here] for bandit towing firms — and the body shops. Violence can flare up over lucrative territory in Philadelphia, the workshop presenters noted. Shouting matches, fist fights and evens shots fired come with territorial disputes.

Dishonest towing firms pounce on vehicles at the crash scenes. They quickly show up at crash scenes and try to reassuringly sweet-talk often traumatized drivers into having their car towed to ZWZ body shop. The towing firm may be operating in cahoots with the body shop to make outrageously inflated repair and towing claims against you and your policy.

Bandit towing firms also grab parked cars and lug them away to a commercial storage yard somewhere. Some vehicles were illegally parked, and others perfectly legal.

Either way, the towing firm piles on dubious fees— parking lot fees, security fees, winching and towing, and so forth. A simple tow down the street can add up to hundreds of suspicious dollars. The unfortunate drivers may have to pay out of pocket just to get their car back, or the fee may be tacked onto their auto policy if it was in an insured crash.

A banged up car may be hauled to a body shop that pays a kickback for the repair business. The body shop may enhance the damage to illicitly tack on thousands of dollars in repairs charged to your auto policy.

A whack with a hammer or baseball bat can add a nice-sized dent to your insurance bill, and so can ramming a forklift into the bumper. Body shops might even have intimidating “escorts” to tail insurer damage estimators around the shop or yard to try and distract them from spotting other fake damage to vehicles. A body shop might also try to bribe drivers into going along with inflated damage claims.

Drivers do have options, the Coalition is alerting the public.

It’s hard to prevent your vehicle from being illegally towed while you’re innocently shopping somewhere. But get a police report on record, and know your local laws about towing. Dispute any fees that seem unwarranted.

Avoid towing firms that miraculously show up at the crash scene. Especially, turn down operators that try to pressure you into hauling your vehicle away.

See if you have roadside service through your carmaker or other service.

Get a detailed invoice and damage assessment before your vehicle is taken, and know exactly where your car is going. Also, avoid giving out too much insurance-policy information. Scammers could use that to make more illicit damage claims.

Be sure to get the towing firm’s name address and phone number before it takes your vehicle away.

And use your cell camera to photograph the damage, position of the vehicles and other information. This can refute an inflated damage claim by a crooked body shop.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Busting bus scams with onboard cameras

Lenses catch knuckleheads faking injuries after minor traffic bumps

blog

America is awash in surveillance cameras. They catch us speeding, jaywalking, robbing ATMs and drugstores. And committing insurance fraud.

This is especially true of some city bus and rail systems. Dishonest passengers use the slightest little traffic tap to try and soak the systems for thousands of dollars in nuisance claims for patently bogus injuries.

So many people have tried the fake-injury gambit on Philadelphia’s bus system that SEPTA has been forced to rig busses with up to 10 cameras per vehicle to catch wrongdoers. Rail cars also are bedecked with the all-seeing lenses. Transit systems in other cities have done likewise.

What’s the tradeoff between preserving passenger privacy, and detecting scams and increasing overall passenger safety?

Look at SEPTA’s experience, at least in fighting insurance scams that contribute to rising fares. At least 9,000 claims for injuries or property damage have been made against SEPTA since the beginning of 2010, and at least 5,000 have been settled in or out of court.

SEPTA also pays about $35 million in claims each year, and about 40 percent of claims are settled without going to court. Some percentage of claims and lawsuits are no doubt false.

Onboard cameras have uncovered varied faked injuries after minor accidents. Here are some recent doozies…

One video shows a woman passenger who didn’t even know the bus was in a low-impact bump. She then flopped down and faked an injury after she realized she had a potential money-maker.

Ronald Moore sprinted down the street to board a bus that was bumped in a minor accident. He climbed aboard and pretended to be injured, holding his back. He was convicted. Moore has nine aliases and convictions for drug, robbery and other offenses.

A motorist who lost control of his vehicle, sliced through two lanes of opposing traffic and hit a SEPTA bus. He claimed the bus went into oncoming traffic and struck his vehicle.

Another woman said a minor crash caused her to jerk and slam against a window, injuring her back. She handed SEPTA a $5,000 insurance claim.

Yet another said the accident caused whiplash, which triggered headaches and back pain. He claimed $6,000 for 39 medical treatments. But no passengers reported injuries at the scene and no emergency crews were called.

Video surveillance on a bus is almost comical. It allegedly shows two passengers talking throughout the ride. Then they continued talking normally after the mirror was clipped, officials say. The DA’s insurance-fraud unit busted them.

SEPTA says it expects all buses to have surveillance cameras this year.

Resolving privacy concerns about bus or train surveillance cameras is beyond the scope of this week’s blog. Let the privacy debates continue on. But in the meantime, city transit systems will be content to let cameras keep disrupting flagrant injury scammers, keeping busses safer, and saving  taxpayers and passengers millions of dollars a year.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Parenting Fraud

Children are the biggest victims of insurance fraud

parentingfraudA South Florida woman received six years in jail on Friday for putting her five kids through several rounds of staged car crashes.

In phone calls from jail, Ana Ovando’s children pleaded desperately with her to stop involving them in various crimes and allow them to have a peaceful home where they wouldn’t have to worry about police officers knocking at the door. Sobbing at her sentencing, her kids said they loved their mother and asked that she be spared from prison.

Also this month, a Calif. father and daughter pleaded guilty to workers comp fraud. The daughter was not an innocent child, but had grown up to become complicit in her father’s schemes and mentality.

The societal damage brought on by these schemes and many other similar schemes is self-evident. But the greatest damage will be the repercussions in the lives of the children.

Growing up, I looked up to my parents with great admiration. I thought they knew everything about the world, and turned to them for advice along every step of my journey. They were my role models, and primary sources for learning how to navigate in society. They spoke using certain gestures, I speak using certain gestures. They explained to me why they had never tried drugs, so I’ve never tried drugs. They killed insects, I kill insects. Most people can mention attributes of parents that they emulate.

Ultimately, the ones who were most defrauded by these cons were the kids. They won’t have a mom at home for the next six years from a self-inflicted injustice. And they will have to piece their lives back together as they grow older and decide what kind of people they want to become. The capacity for good is inside all of us, but Ovando’s children are now starting with a painful disadvantage.

About the author: Jennifer Tchinnosian is communications specialist for the Coalition Against Insurance Fraud.

It’s time to deflate deadly airbag schemes

Thousands of motorists may be driving with cheap knockoffs from China

airbag_schemeMost of us rarely think twice about the airbags tucked into the steering column and other crevasses of our cars and SUVs.

Bang into another car, and presto, the airbag inflates in a micro-second. Your life expectancy just increased.

But guess what. There’s no guarantee you have a working airbag. This blog will expand on an earlier blog on the topic. Remember our last visit to this seedy world:

Thousands of motorists may be driving with cheap knockoffs from China.
The feds tested several of the airbags. Some exploded , spewing metal shards and other shrapnel onto crash dummies. Others just didn’t work.

Those crash dummies could’ve been your kids in a real accident. As many as 250,000 or more drivers may have junky airbags right now, the feds say. A simple trip to the grocery store can be a life-and-death proposition if you’re in a crash.

People have died or been grievously injured in crashes after crooked body shops tampered with their airbags. There’s big profit in cheating you. A knockoff can cost about $50, but the body shop charges your auto-insurance policy hundreds of dollars for a new airbag.

Now comes the scary part: Dishonest mechanics insert junk into the airbag cavity. Old sneakers, beer cans, packing peanuts and other garbage have been found. Body shops also might insert useless knockoffs.

And now let’s look toward an entirely new danger posed by storms such as Sandy: Flood waters will ruin a lot of vehicles. How many will be reconditioned and resold to innocent consumers? The airbag modules may be in place, but they they’ve been ruined by the flood waters and minute debris particles.

The airbags may not have been professionally checked out, and may not work if you’re in a crash.

When these vehicles are cleaned up, much of this damage is not obvious with a basic inspection. And used-car sellers often ship reconditioned cars to other states for sale to unknowing consumers.

Many states require a flooded car to have that fact stamped on its title to warn buyers. Some states require it only when an insurer pays a total-loss claim. Deceitful wholesalers often take flooded cars to a state without any flood-labeling rule and obtain a new title. This is known as “title washing.” It leaves you dangerously vulnerable.

Airbag hoodwinks sit just inches away from you, or your spouse or kids. But these ruses are fiendishly hard to catch because the airbag is out of sight.

The swindlers don’t care if you live or die; they just want their blood money. But there’s a lot you can do help ensure your airbags are safe and life-saving.

Have a certified mechanic check the airbag of any used or reconditioned vehicle you’re considering buying. Visit a useful federal site, the National Motor Vehicle Title Information Service. Check the vehicle’s history via a commercial service. And visit the Coalition’s convenient alert for more ideas.

Your next drive should be safely in your car, not an ambulance.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Taking the air out of airbag scams

Shady airbag traffickers don’t care if you live or die

Imagine you’re driving home after a pleasant dinner with friends one night. An oncoming vehicle veers and slams into your car. Glass flies and metal buckles in that terrifying split second, but your airbag doesn’t open.


I’ll let your imagination roam, and decide how badly injured you’ll be without this vital safety protection as the ambulance speeds your broken body to the emergency room.

But in the meantime, you might want to thank Dai Zhensong or others who traffic in cheap, knockoff airbags being installed in vehicles around the U.S. Also thank crooked body shops that knowingly install such rubbish (literally, but more on that in a minute).

The motive is cold profit. To be blunt…shady airbag traffickers don’t care if you live or die. They just want their blood money; whether you or your kids survive a horrific crash is your business.

Zhensong flooded the U.S. market with tens of thousands of counterfeit bags made at his plant in China. A suspected cohort named Igor Borodin allegedly sold 7,000 of the knockoffs. All told, some 250,000 bags could be out there, either installed or waiting to be installed, the feds say. Zhensong has 37 months in federal prison to rethink his career choice.

How big is airbag fraud nationally? That’s anybody’s guess; nobody keeps total stats.

And most body shops are honest, but some knowingly install worthless airbags after the valid original bags deploy during a crash. Buy a $50 knockoff from the internet or a shady street dealer, and charge the insurer several hundred dollars.

Body shops also shove beer cans, packing peanuts, old sneakers and other junk into the airbag compartment. Or they just leave the compartment empty.

Sometimes a body shop will even pull out an airbag that hasn’t deployed, then lie to the insurance adjuster that the bag had opened during the accident.

Used and salvaged vehicles are especially vulnerable to these scams, but so is your new car if it crashes. So let’s return to Zhensong. Alarmed carmakers have set up call centers that drivers like you can contact to see if your airbag is counterfeit.

Innocent drivers have died or been grievously injured without airbag protection. San Diego-area teenager Bobby Ellsworth died when the Dodge pickup truck in which he was riding crashed. A body shop had stuffed the airbag compartment with paper and glued it shut. Even the dashboard light was disabled so it wouldn’t flash a warning.

Nursing assistant Damaris Gatihi was driving along Interstate 5 in Seattle. Her Toyota Corolla was bumped from behind, then spun around and hit another vehicle head-on. Her airbag didn’t deploy; she died from massive bleeding in her heart. A body shop had cut out the airbags and glued the covers back on to make the bags look functional. A local TV investigation discovered numerous used cars for sale without airbags and phony compartment covers.

Laura Vega of Houston was badly injured and her mother killed when their car was hit head-on. Neither air bag worked. The passenger-side airbag had been previously deployed, then stuffed back in and the cover taped shut. There was no driver-side airbag at all.

Connie Van Slyke’s used minivan crashed. The Kansas City, Mo. woman was killed instantly, possibly after falling asleep at the wheel. Her neck was broken, relatives told reporters. Connie had bought the minivan used, just two weeks prior. The vehicle had been in an earlier crash and the airbags had deployed. Nobody reconnected the bags, and the dashboard warning light was removed. Connie was a single mother; she left behind three young sons.

Najma Ladhani was driving alone in her car outside of Vancouver, Canada. She swerved into an oncoming car. She was found dead, crushed over the steering wheel. A piece of foam filled the compartment instead of an airbag.

Ok, enough of these terrible deaths. Point made: Airbag cons are a nasty insurance ripoff, but a far worse threat to the lives of everyone in a vehicle.

You can turn the odds in your favor with by taking these life-saving steps:

  • Check the dashboard airbag safety light. It should blink for a few seconds then turn off. If the light doesn’t come on or keeps blinking, you may have a faulty airbag;
  • Have a certified mechanic you trust inspect the airbags of any used or salvaged vehicle you’re considering buying. Don’t try to take off the lid yourself; it might trigger an explosion;
  • Use a commercial service to search the history of a used vehicle you’re considering buying. See if it has been in a crash or salvaged; and

It’s time that every driver mobilizes to take the air out of airbag scams. This is one speed limit we should all break.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.