Tips to Help Insureds Avoid Auto Repair Shop Fraud: Part 3

Beware that shops may hold your vehicle hostage to try to collect improper and excessive fees and storage charges!

There are many good motor vehicle repair shops in Massachusetts. However, there are also some bad apples. Over the next few months, this multi-part series will discuss several scenarios that are composites of real situations that often required litigation to resolve. The purpose of this series is to arm agents and companies with information and tips to help insureds avoid fraud and get the full value of the repair paid for by their insurance company. All names used are fictional.

The Scenario

Ms. Pappas was involved in a motor vehicle accident rendering her vehicle undriveable. The police ordered that it be towed from the scene to a nearby motor vehicle repair shop. Ms. Pappas’ insurance company’s appraiser attempted to appraise the vehicle at the shop within the required two days but was turned away by the shop. The appraiser appeared for the next available appointment with the shop four days later but no one was there. The shop finally allowed the insurance appraiser to appraise the vehicle ten days after it had been towed to the shop. The shop and the appraiser agreed that the repairs would be $3,700.

Twenty days later, having completed no repairs, the shop called the insurer and requested a supplemental appraisal. The insurer’s appraiser and the shop’s appraiser could not agree on the cost of any supplemental repairs. Due to the shop’s poor service and refusal to perform repairs for the insurance coverage, Ms. Pappas decided to have her vehicle repaired at another shop.

Although the current shop had not yet completed any repairs, it sent an invoice to Ms. Pappas for $5,100 of charges and placed a lien on her vehicle preventing her from removing it from the shop until the charges were paid. The fees included such charges such as “administrative fee”, “gate fee”, “frame machine tie up”, “appraisal fee”, “diagnostic fee”, “move vehicle into and out of garage fee”, “clean up debris fee”, and over $2,000 in “storage fees”. No repairs were completed and Ms. Pappas was stuck with fees that exceeded the cost to repair her vehicle. Legal action was required to extract her vehicle from the shop.

Tips to Avoid this Scenario:

Under Massachusetts regulations applicable to the repair of motor vehicles, it is an unfair and deceptive act for a repair shop to fail to inform a customer prior to obtaining authorization to perform repairs, the conditions under which the repair shop may impose storage charges and the daily amount of such charges and the amount of any charge for an estimate or diagnosis.

Prior to authorizing any repairs, be sure that the shop has notified you of any fees or charges that might accrue if you choose not to have your vehicle repaired if the insurance appraiser and shop appraiser cannot agree on the cost of the repair or if your vehicle is determined to be a total loss and therefore, will not ultimately be repaired. Some shops will include notice of such charges in the repair authorization paperwork or may post charges on the wall in the shop. Also, be clear as to when storage charges begin to accrue. Most reputable shops will not start to charge storage fees until after repairs are completed. In Ms. Pappas’ case, the shop began charging storage from the day the vehicle entered the shop. It then delayed the initial appraisal, delayed the supplemental appraisal, refused to agree on the repair costs and then charged Ms. Pappas for thirty days of storage.

Many of the other fees charged by Ms. Pappas’ shop would fall under the category of estimate or diagnostic fees. If a customer is not notified in advance of such fees, it is an unfair and deceptive act to charge them in violation of the consumer protection law, Chapter 93A. Further, under the Massachusetts case law, use of the mechanics lien statute to extort improper and excessive fees is an unfair and deceptive act in violation of Chapter 93A.

To avoid surprises and legal action to release your vehicle, be sure to question your repair shop about all possible charges including any charges if the vehicle is determined to be a total loss before leaving your vehicle for repair. Also request written copies of anything that the shop requests you to sign so that you can review the paperwork at home. If there is anything that is unclear or that you do not agree with, you should inform the shop immediately in writing. A paper trail of your interactions with the shop is helpful if legal action becomes necessary.

If any of our readers have stories about repair shops that are bad apples (or good apples!), I’d love to hear them. Feel free to contact me.

Read my other Tips here:

Kara Larzelere

Attorney | ForbesGallagher

Kara Larzelere joined ForbesGallagher in 1994 and concentrates her practice in insurance and corporate matters. She advises insurance companies and insurance agencies on a variety of matters of concern including issues of regulatory compliance, insurance coverage, liability, employment law, organizational structure and acquisitions.

In addition, she has briefed over a dozen appeals before the Massachusetts Appeals Court and the Massachusetts Supreme Judicial Court on varied issues including fiduciary duty law, consumer protection, and indemnification.