Car Insurance

In October 1995, investigators from the R.A.I.D. Task force (Riverside Auto-theft Interdiction Detail) received information that a widespread network of outlaw bikers and their associates were working together to defraud insurance companies.

The suspects acquired expensive Harley Davidson motorcycles either by theft, or conspiring with the legal owners to stage a theft in order to collect insurance money.

The seven-month investigation culminated on May 13 with the return of a 125-count indictment against 35 individuals. The counts include conspiracy, auto theft, operating a chop shop, VIN switching, insurance fraud, assault, sales and transportation of Methamphetamine, kidnaping and torture.

At about 7:00 this morning, over 400 law enforcement personnel representing 21 separate agencies served 35 arrest warrants and about 50 search warrants. The warrants were served at 41 locations throughout Riverside, San Bernardino, San Diego and Los Angeles Counties. There was no report of injury to citizen or officer. Over 30 arrests were actually made.

In October 1995, investigators from the R.A.I.D. Task force (Riverside Auto-theft Interdiction Detail) received information that a widespread network of outlaw bikers and their associates were working together to defraud insurance companies.

The suspects acquired expensive Harley Davidson motorcycles either by theft, or conspiring with the legal owners to stage a theft in order to collect insurance money.

The seven-month investigation culminated on May 13 with the return of a 125-count indictment against 35 individuals. The counts include conspiracy, auto theft, operating a chop shop, VIN switching, insurance fraud, assault, sales and transportation of Methamphetamine, kidnaping and torture.

At about 7:00 this morning, over 400 law enforcement personnel representing 21 separate agencies served 35 arrest warrants and about 50 search warrants. The warrants were served at 41 locations throughout Riverside, San Bernardino, San Diego and Los Angeles Counties. There was no report of injury to citizen or officer. Over 30 arrests were actually made.

The Internet is providing new opportunities for scams and so is an increase in car leasing, although those complaints don’t yet approach those of used-car sales, auto repairs and home improvement.

So said two consumer protection groups that asked state agencies about practices that produced the most complaints. They also learned that con artists are especially targeting the Latino community.

The National Association of Consumer Agency Administrators and the Consumer Federation of America asked consumer agencies to list the top five subjects that generated the most complaints in 1995. Nearly four out of five of the 46 respondents cited used-car sales as the most frequent complaint. Auto repair and home improvement complaints were not far behind. Telemarketing and new-car sales also were in the top complaint list. The increase in car leasing complaints comes at a time when nearly one in three new cars is being leased, rather than sold. “The most common complaint was that consumers did not understand the complicated contract,” said Stephen Brobeck, executive director of the Consumer Federation of America. “Some consumers thought they were purchasing, not (leasing), an automobile. Others were unaware of the substantial charges for early termination (of the contract) or excessive wear and tear.” The Federal Reserve Board last month decided to require that details about leases be put on a single sheet to improve consumer understanding of the deal and simplify the language. But Brobeck said it didn’t go far enough. “The rules, for example, do not require a prominent statement that the agreement is for leasing, not purchase,” he said. “Fortunately, several states do regulate this disclosure.” Among leasing complaints is the “disappearing trade-in” where the consumer is verbally promised a trade-in amount, which does not show up in the actual contract.

The subject of insurance fraud has been attracting a good deal of press in recent years. The reasons for this are several: 1) Consumers have become more aware of the added cost fraud brings to their insurance premium payments and, having come to that realization, are no longer willing to have those costs passed on to them by insurance companies. 2) Insurers themselves have come to realize that just passing on those costs without trying to curtail them gives the industry a bad image; and 3) some state insurance departments have mandated that insurers operating within their borders make a concerted effort to reduce fraud.

All this attention has apparently had some positive results, according to the Oak Brook, Illinois-based Insurance Research Council. According to a recent survey conducted on behalf of the IRC by Roper Starch Worldwide, nine out ten people queried were aware that insurance claim fraud is a factor in the rising cost of auto insurance, and seven out of ten said it’s a major factor.

Also contributing to increasing auto insurance costs is the “exaggeration” of claims for legitimate losses, a practice known as buildup, according to the IRC study. In fact, because acceptance of insurance claim buildup appears to be so pervasive, many believe its effect on costs is much greater than the effect of false claims, notes the Research Council.

The IRC has been tracking responses to both fraudulent claims and padded claims since 1981 and it’s interesting to note that, while there was a steady climb in such behavior during the 1980s, the trend appears to be heading downward.

After hovering just under one-third of respondents for several years during the early ’80s, the percentage agreeing that it’s all right to pad a claim to “make up for the deductible” dropped to 22% in 1993.

A man who pleaded guilty to staging more than 200 fake auto accidents in Oklahoma, Arkansas and Kansas to collect insurance claims has been sentenced to 41 years in federal prison.

Bruce Howard Bryant, 46, was a fugitive for nearly 10 years. He fled shortly before his indictment in August 1992 for schemes that involved 110 people either arranging or participating in wrecks.

Assistant U.S. Attorney Charles Smith said Bryant fled to Belize, and apparently spent much of his time out of the country. He was trying to cross the Mexican border into Texas when he was arrested Oct. 7. He pleaded guilty to mail fraud on Jan. 8.

At Bryant’s sentencing Friday, U.S. District Judge Jimm Larry Hendren also ordered him to serve three years’ probation after leaving prison, and to pay $197,258.08 in restitution to insurance companies that paid property damage claims or settlements to motorists who faked injuries.

Smith said Bryant was a key player in arranging the scams, which occurred between October 1989 and February 1992, Smith said. Sometimes Bryant was a motorist who faked injury.