Alameda County’s lead prosecutor, Pamela Price, has filed suit against several auto insurers including Progressive and USAA, software companies, tech developers CCC information Systems and Mitchell International. A 69-page complaint filed in April, alleges these companies have been working hand-in-glove to shortchange California drivers on payouts for totaled cars. These companies have been accused of using rigged software to lowball the value of wrecked vehicles.
Low balling the value of a total loss deals a significant blow to people who depend on their cars for everything, according to a press release from the Alameda County District Attorney’s Office. “A vehicle is the lynchpin to life in California,” Price said, and fiddling with insurance payouts could lead to missed loan payments, dinged credit scores, job loss, or worse. The complaint lays out the dirty laundry: insurers used the suspect software to churn out “independent” valuations, then strong-armed customers with take-it-or-leave-it settlement offers, leaving many in the lurch.
The Complaint further alleges that once the insured accepts the lowball offer, the insurance companies can resell the same vehicle at auction to minimize its losses further: “Inherent to the Scheme is this loss recoupment opportunity: the [insurance company] would rather total a vehicle than repair it because of the opportunity to recoup…. If [it] pays to repair the vehicle, it has no ability to recoup any of that loss.” The complaint suggests that once insurers get customers to accept the low-ball offer, they can flip the totaled cars at auction, minimizing their cash outlay. This approach allows the company to actually profit while allegedly leaving California’s car owners and businesses high and dry, facing skewed vehicle values and repair shops missing out on business.
The DA’s office is seeking penalties, paybacks for shorted consumers, and an injunction to end these anti-consumer actions. The suit further suggests this takes advantage of disadvantaged groups including seniors and people of color. California law could pile on extra penalties for preying on these protected classes. California residents have a an on-line complaint form if they have reason to believe they were damaged as a result of this behavior. A link to that complaint form is here: Alameda County District Attorney Consumer Complaint Form.
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