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California Study Finds Rampant Fraud in Auto Body Shops

December 2, 2003
California auto body shops are challenging a state study that found 42 percent of the collision repair jobs in the state are fraudulent, but the state is standing by the study, which it says found major problems in the industry.

“We found significant problems," said Mike Luery, deputy director of communications for the California Department of Consumer Affairs. "That doesn’t mean that the whole industry is bad. All we can speak to is what we found in this study. The bottom line is to make sure that California laws are being obeyed and followed, and when the BAR does find violations, we take action to protect consumers.”

The California Bureau of Automotive Repair (BAR) reviewed 1,314 repair jobs costing more than $2,500. It found that in 551 of the cases, the invoice falsely listed parts or labor that had not actually been supplied. The average excessive charge was $811. The BAR referred 46 cars to local district attorneys for possible criminal or civil action.

The National Auto Body Council (NABC) and California Autobody Association (CAA) have taken issue with the study’s results and are challenging the validity of its findings as well as the methodology used to conduct the study.

“There are distinct differences between accuracy and validity, as well as a very questionable predisposition to finding fraud,” said Chuck Sulkala, executive director of the NABC and owner of Acme Body & Paint, Jamaica Plain, Mass., in a written statement issued by the organization.

“These statements ... have been presented as a representative sample of the work of our entire industry,” Sulkala said. He said insurance companies, attorneys and consumer organizations have had a field day with what he calls the BAR's “pseudo statistics.”

The state, however, says its findings are the results of a non-partisan, objective study that is useful to consumers and honest body shops. The BAR study was mandated by a state law that provided for the licensing and regulation of automotive repair dealers, including autobody shops, by the BAR.

The fender benders complain that the study was restricted to owners who asked the state to examine the repairs to their car.

"If I fix your car and you complain to the BAR, chances are that you have a problem,” said Don Feeley, immediate past president of the California Autobody Association. Feeley contends that much of the fraud may actually be "administrative mistakes," such as accidentally leaving off a molding or putting an old one back on when it should have been replaced.

"I understand where they [repairers] are coming from, but I think it’s important to shed light on the matter by showing facts. This was not a skewed sample. The program was open to anyone who wanted to participate,” Luery said.

Luery notes that as a result of the study, the BAR took 47 administrative actions, meaning that the shops must go before an administrative law judge while the BAR presents its evidence and the shop presents any findings in its favor. The judge then makes a ruling, and the outcome may affect the shop’s license and ability to do business.

The BAR also made 46 referrals to district attorneys, more serious action that can lead to ciminal charges.

"We realize that some shops do make mistakes which are easily corrected. That’s why when fraud was found at a low-dollar amount, the BAR conducted office conferences to work with the shops to achieve voluntary compliance," he said. He said 110 such conferences were held.

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