Friday, 31 August 2007 17:00

CIC: Responsibilities in Avoiding Unfair Trade Practices

Written by

Collision repair shops regularly decry the practice by some insurers of denigrating one shop in order to influence a consumer to select a shop in that insurer’s direct repair program (DRP). But could that DRP shop be found to be engaged in an unfair trade practice based on that insurer’s behavior? 

       That was the type of question raised in late July at the Collision Industry Conference (CIC) by attorney Erica Eversman, chief counsel for Vehicle Information Services, Inc., an Ohio-based consulting company that specializes in issues related to vehicle manufacturing, sales and repair.

        Eversman said suits involving “unfair trade practices” are particularly popular with attorneys because they are relatively easy to prove and can involve such penalties as triple the damages.

        Defining what is considered an unfair trade practice can be challenging, Eversman said, because it can change over time. The term generally refers to consumer protections that prevent business practices that society deems “unethical” or “unscrupulous” but that may not otherwise be prohibited by a specific law.

        She said that not providing consumers with all the information they need to make an informed decision can be construed as an unfair claims practice. Just as a patient relies on a doctor not to withhold information about treatment options, she said, consumers generally also know little about collision repair and expect that fair trade protections will ensure they are given information they need to make any necessary decisions about what is done to their vehicle.

        “If it eventually comes out that you didn’t necessarily fix the car in their best interest because you were operating under some external agreement, those are things that society tends to have a problem with,” Eversman said.

        Misrepresenting the type of parts used in repairs is clearly an unfair trade practice, she said. And she personally believes such terms as “quality replacement part” could be an unfair trade practice.

        “Because consumers don’t know what the heck that means,” she said, “they don’t know that may mean they are getting aftermarket, recycled, remanufactured or rebuilt.”

        Predatory pricing, or charging less than your actual costs, is another unfair trade practice, Eversman said. She said she believes the “courtesy estimate” – one written by a shop based on photos or an estimate provided by another shop rather than on an actual physical inspection of the vehicle – would clearly be ruled an unfair trade practice.

        And because anyone who participates or makes an unfair trade practice possible can be held liable, Eversman said it’s conceivable that a shop in an insurer’s DRP could be viewed as liable if that insurer uses unfair trade practices to lead consumers to that shop and away from others.

        “Be fair. Be forthright. And compete based on quality, service and reputation,” Eversman recommended to those at CIC. “Know who your customer is. Know who your competitors are. And most impor-tantly, uphold your professionalism.”

 

Database taskforce reports progress

Also at the July CIC meeting in Orlando, Florida., the CIC Database Taskforce reported that it has been successful in getting collision repair estimators and technicians easy access to more information about the increasingly-used advanced high-strength steels in new vehicles.

        “I’m pleased to tell you all three of the (estimating system) information providers have done a tremendous job in the last six months to a year of including the identification of new substrates in their systems,” Lou DiLisio, chairman of the taskforce, said.

        The taskforce, which includes representatives from three national trade associations, has worked with the automakers and estimating system providers to get information on where aluminum, boron and other specialty steels are located on vehicles into the estimating systems for easy access for shops.

        These new metals often require special tools or procedures to remove, repair or replace, DiLisio said, and knowing where they are located is a key step in making proper repairs efficiently.
The taskforce, formed last year, has also been meeting with the estimating system providers on a variety of other issues, including some formalized system of disclosure when a large-scale change is made to an estimating database.

        DiLisio said the taskforce is also working on issues related to color blending.

        “We understand that some segments within the industry are taking reductions for blending within a panel that far exceed (the portion of refinish) times we have heard (account) for the basecoat application,” he said.

        Some insurers, for example, are reducing a refinish time by 50 percent for a blended panel. But only a portion of the full refinish time accounts for application of the basecoat, and only that portion – not the full refinish time – is what should be being reduced, DiLisio said.

        The taskforce, therefore, is trying to determine what percentage of a refinish time accounts for basecoat application, something the estimating system providers have so far not been specific in explaining, DiLisio continued.

        Another long-standing topic the taskforce is addressing with the estimating system providers is a formula or other means for accounting for the “feather, prime and block” operations that take place after the body repair process is completed but that are necessary to bring the repaired surface to the condition of a new undamaged panel.

        “The major information providers are all looking at a variety of things to implement to address this,” DiLisio reported at the Orlando meeting. “Some of them are looking at pop-down windows, some of them looking at formulas, some of them are looking at just offering the option for a manual entry.” 

 

Repair info availability discussed

Also at CIC, Bob Keith, chairman of the CIC Repair Standards Committee, said a number of organizations in which he is involved are reviewing the automaker repair information websites to see what collision repair information – such as bonding and sectioning information – is available and what is missing. He said in terms of basic structural information – dimensional specifications, weld locations, etc. – all but Nissan seem to have fairly specific information. He said Nissan has “stated this is an area they will work on.”

        He said in most cases, “the information collision repairers need is out there,” although the differences in structure and layout of the OEM websites can make it challenging to find the information at times.

        Keith also said the I-CAR-developed Uniform Procedures for Collision Repair (UPCR) are still available for free in I-CAR’s “Technical Information” section at www.i-car.com and still provide good general repair guidance despite not having been updated since I-CAR found little demand for them back in 1999.

        “If you haven’t gotten online and looked at that, you really should,” Keith said. “There’s some great general information there. The committee would like to maybe work with I-CAR to do some updating on it.”

        Keith said that I-CAR reports the “steering, rack and pinion” section of the UPCR gets the most use – more than 4,000 hits a year – followed by the procedures for lock cylinders, seatbelts, and bumper covers.

        John Yoswick is a freelance writer based in Portland, Ore., who has been writing about the automotive industry since 1988.

 

Read 2228 times