Scams relating to auto insurance can take many forms, but they all have one thing in common – they cost everyone!
All policyholders end up paying for inflated or improper payments associated with an insurance claim. That means you end up paying for someone else’s greed!
By being an informed consumer, you can help eliminate these scams – and help lower auto insurance premiums.
This brochure provides tips on how to avoid tow truck scams, and help eliminate them too. It has been published by the Financial Services Commission of Ontario (FSCO), an arm’s-length agency of the Ministry of Finance that regulates financial services sectors, including insurance. FSCO works to enhance public confidence in, and access to, a fair and efficient financial services industry in Ontario.
How Do the Tow Truck Scams Work?
A tow truck driver may be paid a referral fee by a vehicle repair or body shop to have damaged vehicles towed there. These types of tow truck drivers are known in the industry as "chasers." A tow truck driver may be breaking a municipal bylaw by recommending a repair shop without being asked.
Many "chasers" are owned or controlled by vehicle repair shops. Insurance companies may choose not to do business with these shops. If the insurer does not deal with the shop to which your vehicle has been towed, your vehicle may need to be towed to another repair shop. But before that happens, you may be required to pay for the towing service, storage and possibly other administrative fees. These fees can add up to hundreds or even thousands of dollars, and your insurer may not cover these fees. If you refuse to pay them, the vehicle repair shop can apply the Repair and Storage Liens Act and sell your vehicle to cover the fees.
To recover these referral fees, tow truck drivers and repair shops may "pad" their bills. In the end, you and other policyholders end up paying.
What Can You Do?
Be informed. If you require the services of a tow truck driver, know your rights. Here are some tips:
- Make sure the tow truck has a municipal licence number on its side before you use its services.
- Look to see if the tow truck is affiliated with a reputable company such as an automotive roadside assistance group or automobile association.
- Ask if the tow truck has a police contract.
- Listen for obvious clues. Does the driver recommend a particular repair facility without being asked? If he/she does, this might be an indication that a referral fee arrangement exists. In Toronto, making such a recommendation may be illegal under the Municipal Code, Chapter 545.
- Carefully read everything the tow truck driver asks you to sign.
- Ask that your vehicle be taken to a secure location where an adjuster or appraiser from your insurance company can have access to it. Some municipalities require that your vehicle be taken to a Collision Reporting Centre or police station before it goes anywhere else.
- Contact your insurance company, if possible, for information on towing and where to take your vehicle to be repaired.
- Consider having your vehicle towed to a preferred vehicle repair shop. Some insurance companies use preferred repair shops where they have an agreement that guarantees your vehicle will be repaired to the highest possible standards. For more information, contact your insurance company.
Who Do You Contact?
If you suspect that you may be a victim or target of a scam or fraud, you can help put an end to the scam or fraud by reporting it.
As a first step, report the matter to police. You can also make a report to FSCO’s Fraud Hotline. Go to www.fsco.gov.on.ca/TipNow or call 1-855-5TIP-NOW. Tips to FSCO’s Fraud Hotline can be anonymous.
You can also submit an anonymous tip to Crime Stoppers (1-800-222-TIPS).
In addition to the police, there are a number of other organizations that you can contact for help.
Need More Information?
For additional information, please call FSCO’s Contact Centre at: (416) 250-7250, Toll-free: 1-800-668-0128.