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 lately aired CNN report’s allegation that auto insurers could be pressuring buyers to repair their cars at the insurers’ preferred repair shops.

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

“It appears to be common expertise among auto repair shops that the ideal way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering consistent, quality service, but by agreeing to charge beneath-market place labor prices and use less expensive, salvaged, utilised, or even counterfeit components of questionable good quality and safety,” Blumenthal wrote.

“Unfortunately, several buyers are also becoming misled into thinking 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, creating a significant safety risk, and suppressing competition in the auto repair industry.”

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

The Honorable Eric Holder

Attorney Basic of the United States

Robert F. Kennedy Constructing

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Lawyer Basic Holder:

As a longtime advocate of consumer decision, 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 techniques to stress buyers into repairing their automobiles at insurer-preferred repair shops. As uncovered in a particular investigation featured on Anderson Cooper 360 Wednesday evening, insurance coverage steering not only undermines a standard consumer proper, but can also compromise the safety of automobiles on our nation’s roads—endangering motorists and their passengers.

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

As junk yard, remanufactured, and utilised parts of substandard quality turn into increasingly widely available, auto insurers are adopting alarming new ways to save funds at the expense of customer security. Contrary to what shoppers might be led to believe by their insurers, repair shops preferred by insurers do not necessarily equate with top quality repairs. It appears to be typical understanding 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 consistent, top quality service, but by agreeing to charge beneath-market place labor prices and use more affordable, salvaged, employed, or even counterfeit components of questionable high quality and security. Unfortunately, a lot of consumers are also getting misled into pondering that they are required to have their automobile repaired at a single of these shops. This has the damaging impact of limiting consumer choice, producing a serious security threat, and suppressing competition in the auto repair industry.

According to a 1963 consent decree with the DOJ, a number of insurers had been ordered to quit: “sponsoring any appraiser directing, advising or otherwise suggesting any person or firm do organization with any independent or dealer-franchised automotive repair shop working out handle more than the activities of any appraiser and fixing or otherwise controlling the rates charged by automotive repair shops for the repair of damage to the vehicle or for labor in connection therewith, by use of a flat rate.” More than 50 years have since passed, and consumers and auto repairers possibly stay victims of the extremely identical misconduct insurers had been directed to stop 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 present federal laws. As you investigate this matter, I urge you to use your authority to investigate the contents of contracts among insurance coverage businesses and facilities listed in their direct repair programs or preferred lists. I would also like to request an update regarding DOJ’s understanding of the existing signatories of the 1963 consent decree and whether or not they continue to be bound by the consent decree in light of enterprise transactions in the years since the decree was signed.

Thank you in advance for your prompt interest to this essential matter harming buyers and the auto repair business, and compromising car safety.

Sincerely,

RICHARD BLUMENTHAL

United States Senator

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