Could you be a victim of auto fraud (and not even know it)?

Car accidents can be traumatic and disorienting. They may leave you in shock, perhaps even injured — so you’re likely to feel relief when a tow truck arrives on the scene and offers to help. But it’s also a time when you need to remain vigilant as fraud can start at the site of an accident.

Most tow truck operators and auto body shops are reputable. However, auto insurance fraud is a multi-billion-dollar problem and some tow truck operators and auto body shops have been found to be complicit in this fraud. Unfortunately, the cost of auto insurance fraud  is directly reflected in auto insurance premiums, according to the Insurance Bureau of Canada (IBC).

How to recognize common towing and auto repair fraud

“Very often fraud starts with the tow,” says Jim Pletsas, Manager of the Special Investigations Unit – Executive Claims with Wawanesa Insurance.

Here’s how it works: A tow operator arrives on the scene, often before police, and tells you they’ll take your car to the best body shop. In reality, they’re receiving a drop-off fee and/or a kick-back from the body shop they recommend.

Dishonest tow operators may not take the vehicle directly to the body shop though. Instead, they may first take it to their own storage lot for a few days. The consumer is charged for all of this (often $60-100 per day for storage, and extra tows can bring the total cost to several thousand dollars). The tow operator may even cause additional damage to the vehicle before it arrives at the body shop to inflate the repair costs and their kick-back.

The sum of the parts does not add up

When an insurer does an appraisal, it’s typically based on how much it would cost to replace the necessary parts. But a dishonest body shop will ‘repair’ rather than ‘replace’ the necessary parts, and pocket the extra money. For example, if they’re authorized to replace a scratched headlight, they’ll just buff out the scratch rather than replace the headlight — but they’ll bill you for the replacement headlight.

“Fraudulent repair shops are not replacing parts that members are entitled to have replaced because they need to find payment to kick back to tow operators and make some money for themselves,” says Pletsas. “The fraud is against the insurance companies and it’s against our members, which ultimately drives up insurance rates.”

Some fraudulent repair shops will also purposely damage the vehicle to inflate the repair bill or swap out parts for something cheaper. The end result, however, looks good to the customer, so they may not realize they’ve been a victim of fraud until months later. Over time, the sub-par work starts to show — the paint peels, the ‘replacement’ parts start deteriorating – and they realize they may have been taken advantage of.

4 ways to protect yourself from fraud after a car accident

There are simple ways to protect yourself, and your vehicle, from fraud.

1. Call your insurance company ASAP

If you’re in an accident, after you’ve assessed your health and safety, call your insurance company before making any decisions. “Don’t necessarily go with the first tow truck at the scene, especially if you’re being pressured,” says Pletsas. Your insurer can recommend preferred tow operators and body shops that have been vetted to provide the highest standards possible.

Wawanesa, for example, has a toll-free emergency line available 24x7, and offers a Claim Service Guarantee when members use a preferred vendor for repairs. Ensure this contact info is in your vehicle or phone so it’s easy to find in the event of an accident.

2. Check if the tow truck is reputable

Confirm that the name of the towing company, as well as the tow license number, is displayed on the truck. Some municipalities require Permission to Tow forms – so ask the operator if this is required in your region. If so, request a copy of the completed form (never sign a blank form). Ensure your vehicle is towed to the location on the Permission to Tow form, and that the same information appears on the invoice. The cost should always be agreed upon before your vehicle is towed and you should know exactly where your vehicle is headed.

3. Find a Collision Reporting Centre

Some municipalities and cities, including the Greater Toronto Area, have Collision Reporting Centres where you can leave your vehicle 24/7. It will then be appraised by a representative of your insurance company. The first day of storage is free, and after that it’s a minimal charge per day — much less than what a dishonest tow operator will charge. You can still have your vehicle taken to the shop of your choice and most insurers will pay for the additional tow.

If there are no Collision Reporting Centres in your area, you can even leave your vehicle at a police impound lot.

4. Trust your instincts (and don’t be afraid to change your mind)

If something about a tow operator doesn’t feel right, take a breath and slow the process down. Fender benders and car accidents can create a lot of stress, and fraudulent tow operators prey on this. By staying calm and doing things in a way you’re comfortable with, you’ll maintain control of the situation and not let them take advantage.

In the end, you can always change your mind after a tow, especially if you’re uncomfortable with where your vehicle was taken. If you weren’t able to follow the steps above, talk with your insurance provider and get them to tow your vehicle to a trusted and preferred business as soon as possible.

Insurers are working together to fight auto insurance fraud, and all claims investigators belong to the Canadian Association of Special Investigation Units. If you feel you may have been a victim of fraud, call the ombudsman line and report concerns to the Canadian Anti-Fraud Centre.

Up next: How 3 Wawanesa Insurance Specialists help members through the claims process