Airbag Fraud Prompts New California Law

Consumers must navigate a number of potential dangers when considering a used car. However, buyers may not think about whether the airbags are in their original condition, especially if they are purchasing a car with a salvage title (a car that had previously been in an accident). Because of this naivety, airbag fraud is becoming increasingly common.

June 10, 2011 /24-7PressRelease/ — Consumers must navigate a number of potential dangers when considering a used car. They have to make sure the mileage is accurate, determine if the engine is in reasonable condition, and ensure that the brakes and suspension are in working order, to name just a few. However, even the most conscientious buyer may not think about whether the airbags are in their original condition, especially if the buyer is purchasing a car with a salvage title (a car that had previously been in an accident). Because of this naivety, airbag fraud is becoming increasingly common.

The National Highway Transportation Administration (NHTSA) issued a report on fatal crashes in 2008 that revealed troubling information about used airbags. In 255 of 1,446 fatal accidents, airbags had not been replaced after a previous crash. In nearly 50 percent of all fatal crashes with non-deployed airbags, these safety devices were defective or simply missing. So while non-deployments are rare, fatalities are likely when airbags do not work as intended.

This article will describe the trend of airbag fraud, highlight legislation recently passed in California to help protect consumers, and provide some tips to help unwary buyers avoid unsafe cars.

Airbag Fraud: Insurance Fraud and Refund Scams

In the abstract, airbag fraud occurs when the original airbag is not replaced or calibrated to its previous condition. Airbags are expensive materials and the replacement process is a delicate exercise. Unscrupulous used car dealers more likely to shirk this process to save time and money in getting cars ready for resale. By reducing the amount of money put into a car, the potential profit increases. Repair shops also engage in this practice for the same reasons. They stand to make more money by purchasing airbag parts very cheaply over the Internet, yet they can charge a customer or insurance company full price for the parts and labor

As such, airbag fraud has two distinct components: insurance fraud, where the airbag cavity is stuffed with concealable materials such as rags, foam or paper towels while the insurance company is billed for actual airbag parts; and refund scams, where a body shop actually orders a new airbag for a customer but never installs it. Instead, the shop bills the customer for the part and returns the airbag to the manufacturer.

Unfortunately, there are no hard statistics detailing the prevalence of airbag fraud, but insurance officials are concerned about the warning signs driving this trend. Jim Quiggle, Director of Communications for the Coalition Against Insurance Fraud says, “Airbag fraud is a black hole for data,” and, “Nobody knows how widespread it is, but the warning signals are everywhere.” The coalition’s executive director, Dennis Jay, is concerned with online sites selling nonconforming airbag parts in violation of state law. He explains that there are enough instances for consumers buying used cars to be concerned, because there is a potential for a vehicle to not have a functioning airbag.

California Passes Automotive Repair Act

To address this growing concern, the California Senate recently passed the Automotive Repair Act (Senate Bill 869), which established the Bureau of Automotive Repair. Among the many regulations the Bureau will enforce, auto repair shops would now be required to return airbags to their original operating condition when replaced during collision repair. Under the new statute, a repair shop or dealer who prepares a written estimate for the replacement of a deployed airbag, and who fails to repair and fully restore it, is guilty of a misdemeanor that is punishable by a $5,000 fine, by one year imprisonment in a county jail, or by both that fine and imprisonment.

A number of automakers, including Honda, Mitsubishi, Hyundai and Toyota, applauded the legislation. They found it clarifies repair shops’ responsibilities, reduces fraud, and promotes driver safety.

Check the Carfax History

Even with the new law in place, drivers should take the following steps to make sure that airbag repairs are properly completed. For used car buyers, checking a vehicle’s Carfax history is an important step. This report will indicate whether a car has been in an accident, which would lead buyers to do a VIN number check on each of the car’s airbags. A technician could even check the airbags to see whether the same airbags are still in the vehicle.

For owners having cars repaired, checking the airbag indicator is essential. When the car starts, an airbag indicator should appear instantly and then go out. A continuous flashing light may indicate an airbag system malfunction. If the light never turns on, the airbag may be missing.

Consumers who believe they are victims of airbag fraud should contact an experienced attorney to learn more about their rights and options.