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

U.S. Senator Richard Blumenthal (D-Conn.) is urging the Department of Justice (DOJ) to investigate a not too long ago aired CNN report’s allegation that auto insurers might be pressuring customers to repair their cars at the insurers’ preferred repair shops.

“Contrary to what buyers may be led to believe by their insurers, repair shops preferred by insurers do not necessarily equate with good quality repairs,” Blumenthal wrote in a letter sent to U.S. Attorney General Eric Holder last Friday.

“It appears to be typical knowledge among auto repair shops that the greatest way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering constant, good quality service, but by agreeing to charge beneath-market labor prices and use more affordable, salvaged, utilized, or even counterfeit components of questionable top quality and security,” Blumenthal wrote.

“Unfortunately, many consumers are also becoming misled into pondering that they are essential to have their auto repaired at one particular of these shops,” Blumenthal wrote in the letter. “This has the dangerous impact of limiting customer option, creating a significant security risk, 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

Lawyer General of the United States

Robert F. Kennedy Creating

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Attorney Common Holder:

As a longtime advocate of consumer selection, I create to bring to your interest to troubling new proof that our nation’s prime auto insurers continue to engage in anticompetitive and possibly illegal tactics to pressure customers into repairing their automobiles at insurer-preferred repair shops. As uncovered in a special investigation featured on Anderson Cooper 360 Wednesday evening, insurance steering not only undermines a fundamental customer appropriate, but can also compromise the security of vehicles on our nation’s roads—endangering motorists and their passengers.

I urge the Department of Justice (DOJ) to quickly investigate such practices by the auto insurance sector and act swiftly to protect the safety of customers and preserve competition in the auto repair business.

As junk yard, remanufactured, and used parts of substandard high quality turn out to be increasingly widely available, auto insurers are adopting alarming new ways to save money at the expense of customer security. Contrary to what consumers could be led to think by their insurers, repair shops preferred by insurers do not necessarily equate with high quality repairs. It seems to be widespread expertise amongst auto repair shops that the very best way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering constant, good quality service, but by agreeing to charge below-market place labor rates and use cheaper, salvaged, utilised, or even counterfeit parts of questionable quality and safety. Unfortunately, a lot of consumers are also getting misled into pondering that they are necessary to have their vehicle repaired at one particular of these shops. This has the damaging impact of limiting consumer option, producing a severe safety danger, and suppressing competition in the auto repair market.

According to a 1963 consent decree with the DOJ, a quantity of insurers had been ordered to stop: “sponsoring any appraiser directing, advising or otherwise suggesting any person or firm do business with any independent or dealer-franchised automotive repair shop exercising handle more than the activities of any appraiser and fixing or otherwise controlling the prices charged by automotive repair shops for the repair of harm to the car or for labor in connection therewith, by use of a flat rate.” Over 50 years have given that passed, and shoppers and auto repairers possibly stay victims of the very exact same misconduct insurers were directed to quit performing decades ago.

I urge the DOJ to investigate and make a determination as to no matter whether such practices violate the 1963 consent order or any other current federal laws. As you investigate this matter, I urge you to use your authority to investigate the contents of contracts in between insurance coverage companies and facilities listed in their direct repair programs or preferred lists. I would also like to request an update concerning DOJ’s understanding of the existing signatories of the 1963 consent decree and regardless of whether they continue to be bound by the consent decree in light of business transactions in the years considering that the decree was signed.

Thank you in advance for your prompt focus to this essential matter harming shoppers and the auto repair industry, and compromising automobile security.

Sincerely,

RICHARD BLUMENTHAL

United States Senator

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