Insurance Fraud NEWS
Towing firms bilk Alabama insurers, police can’t investigate all
June 17, 2019, Mobile, AL
You’ve just wrecked your car and a Mobile police officer arranges for your vehicle to be towed, picking a towing company off a list kept by the department.
Pretty convenient, right? The company arrives and tows your car to its yard, and you even get to ride shotgun in the front cab. Fun.
That tow should cost $125 plus a daily fee of about $20 per day storage for regular vehicles, per Mobile City ordnance laws. But what do you care, an insurance company is picking up the tab.
Well, guess what? A small number of towing firms have allegedly been charging insurance companies far beyond the $125 fee, according to police.
There have been as many 30 complaints against 56 towing companies, said MPD Assistant Chief Roy Hodge. As a result, police and the Mobile County District Attorney’s Office recently began an insurance fraud investigation.
No charges have been brought yet and Hodge did not disclose the names of companies under investigation.
The investigation came about when representatives from Mobile towing companies began asking the city council meetings to increase the $125 towing fee to $150, the same rate allowed by the Alabama Law Enforcement Agency and the Mobile County Sheriff’s Office, Hodge said.
“It was probably only about four to six weeks ago, the news got hold of the possible increase in the fee and the public started paying attention,” Hodge told AL.com. “And it was because of that we started receiving information that the towing companies were overcharging people. Those people started sending us their insurance receipts.”
News of the investigation broke June 11 when Public Safety Director James Barber asked the city council to delay making changes to the ordnance until the investigation is complete.
“We had a lot of wrecker companies come down complaining about the ordinance, and so we were revising the ordinance, but out of that came information to us that several companies may have been gouging customers,” said Barber. “And so we began looking at excessive charges, charges for services not rendered and charges that were inappropriate.
Hodge said that the situation was regrettable for MPD because the department was essentially the middle man between the towing company and the person in need.
“That’s really a bad position for us to be in because we’re basically the agents for the towing companies,” he said. “And then, when that person is overcharged, we don’t know its happening but it’s happening through us.
“And that is that is wrong, very wrong,” he added.
Another change in the ordnance would have ended what’s known as gate fees. Many of the yards owned by towing companies charge about $50 for a driver to come and release a vehicle. The towing companies didn’t want the gate fee taken away but recognized they would have to sacrifice it in order to have the towing fee increased, Hodge said.
Mobile police deal with about 12,000 traffic incidents every year, Hodge said. Of that, a little more than half result in the towing of a vehicle, using one of the 56 companies on the rotational list of towing companies.
Unfortunately, because of sheer number of claims, MPD is unable to review all 6,000 instances where a vehicle was towed, Hodge said.
Members of the public who believe they’ve been victims are being asked to come forward with evidence they have been overcharged.
Hodge said investigators weren’t sure at first if the few initial complaints they got were isolated incidents.
“We didn't think it was a big deal at first,” he said. “The more we started looking into it the more we found that there was a lot of improper conduct going on.”
He also said that, in general, insurance companies, because they process so many claims a year, don’t really pay much attention to what they might see as a relatively small claim from a towing company, but he said that some people were being charged upwards of $2,000 in various fees after having their vehicles towed.
Hodge characterized the investigation as “white collar” and said that the Mobile District Attorney’s Office would review each criminal investigation thoroughly before bringing any charges.
Each instance of insurance fraud between $1-$1000 would result in a class C felony, Hodge said. That means a possible jail term of anything between one year plus a day to 10 years in the state penitentiary. Over $1000 would results in a class B felony, which carries a sentence of between two and 20 years per instance of fraud.
AL.com reached out to several towing companies last week but none responded to requests for comment.
The South Alabama Towing and Recovery Association said in a press release Friday that comments from Hodge and Barber were “irresponsible and careless.”
“In making his public statement, I would, first, like to reach out to our members, as well as, all others in Mobile’s towing industry who have been affected by such allegations and encourage all to hold strong to your integrity in the face of such malicious assassinations being aimed at your person and business,” said Crystal M. Smith, President of the association.”
She added: “We would like to express to the public, that we, in no way, condone overcharging or taking advantage of the citizens of Mobile. If such allegations are proven, we completely support any punishments to the offender as may be fitting. However, we also ask that public opinion remain neutral until such allegations are brought to light.”