Conn. Senator Urges DOJ to Investigate Auto Insurers’ ‘Preferred’ Repair Shops

U.S. Senator Richard Blumenthal (D-Conn.) is urging the Division of Justice (DOJ) to investigate a lately aired CNN report’s allegation that auto insurers might be pressuring consumers to repair their autos at the insurers’ preferred repair shops.

“Contrary to what customers might be led to think by their insurers, repair shops preferred by insurers do not necessarily equate with quality repairs,” Blumenthal wrote in a letter sent to U.S. Attorney General Eric Holder final Friday.

“It seems to be typical information among auto repair shops that the best way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering constant, high quality service, but by agreeing to charge under-market labor rates and use less costly, salvaged, employed, or even counterfeit parts of questionable high quality and security,” Blumenthal wrote.

“Unfortunately, several buyers are also getting misled into considering that they are required to have their auto repaired at 1 of these shops,” Blumenthal wrote in the letter. “This has the damaging impact of limiting customer selection, generating a critical safety threat, and suppressing competitors in the auto repair business.”

The following is the complete text of Blumenthal’s Feb. 20 letter to Attorney Basic Holder:

The Honorable Eric Holder

Attorney Basic of the United States

Robert F. Kennedy Developing

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Lawyer General Holder:

As a longtime advocate of consumer choice, I write to bring to your interest to troubling new evidence that our nation’s leading auto insurers continue to engage in anticompetitive and possibly illegal tactics to pressure buyers into repairing their cars at insurer-preferred repair shops. As uncovered in a specific investigation featured on Anderson Cooper 360 Wednesday evening, insurance steering not only undermines a basic customer correct, but can also compromise the security of vehicles on our nation’s roads—endangering motorists and their passengers.

I urge the Division of Justice (DOJ) to instantly investigate such practices by the auto insurance market and act swiftly to defend the security of buyers and preserve competitors in the auto repair market.

As junk yard, remanufactured, and used components of substandard high quality become increasingly broadly accessible, auto insurers are adopting alarming new techniques to save cash at the expense of customer security. Contrary to what customers might be led to believe by their insurers, repair shops preferred by insurers do not necessarily equate with high quality repairs. It appears to be frequent expertise among auto repair shops that the best way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering consistent, good quality service, but by agreeing to charge beneath-marketplace labor rates and use cheaper, salvaged, utilised, or even counterfeit parts of questionable good quality and security. Unfortunately, many consumers are also getting misled into thinking that they are required to have their vehicle repaired at one of these shops. This has the damaging impact of limiting consumer choice, creating a significant security danger, and suppressing competition in the auto repair industry.

According to a 1963 consent decree with the DOJ, a number of insurers have been ordered to stop: “sponsoring any appraiser directing, advising or otherwise suggesting any individual or firm do enterprise with any independent or dealer-franchised automotive repair shop working out control over the activities of any appraiser and fixing or otherwise controlling the costs charged by automotive repair shops for the repair of harm to the automobile or for labor in connection therewith, by use of a flat rate.” Over 50 years have given that passed, and customers and auto repairers possibly stay victims of the really identical misconduct insurers have been directed to cease undertaking decades ago.

I urge the DOJ to investigate and make a determination as to whether or not such practices violate the 1963 consent order or any other existing federal laws. As you investigate this matter, I urge you to use your authority to investigate the contents of contracts amongst insurance coverage organizations and facilities listed in their direct repair programs or preferred lists. I would also like to request an update with regards to DOJ’s understanding of the current signatories of the 1963 consent decree and whether or not they continue to be bound by the consent decree in light of organization transactions in the years since the decree was signed.

Thank you in advance for your prompt interest to this crucial matter harming buyers and the auto repair industry, and compromising car security.

Sincerely,

RICHARD BLUMENTHAL

United States Senator

 
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Conn. Senator Urges DOJ to Investigate Auto Insurers’ ‘Preferred’ Repair Shops