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Drivers maneuver unsuspecting motorists into crashes in order to make false insurance claims. The cars generally suffer little damage in relation to the large demand that is then fraudulently submitted. In 2011, a group of seven people in North and South Carolina were arrested for allegedly stealing over $100,000 through staged crash schemes.
Varieties of the Scams
- The “Swoop and Squat” scheme involves two cars: one drives beside the victim, while the other ‘swoops’ in front of the victim car and stops suddenly, causing a rear-end crash. The first car is usually full of accomplices who will claim that they were injured even if it was only a low-speed crash, submitting fraudulent claims to the insurance company. The swoop car is usually driven by an experienced ring member, while the “squat” car is generally full of either accomplices, or victims. In the 1990s poor Hispanic immigrants were recruited to drive the swoop cars: a high-risk job that nobody wanted, but for which the immigrants could be paid only $100. One such driver, Jose Luis Lopez Perez, died after a swoop and squat crash, leading to an investigation which revealed massive amounts of this fraud.
- The “Panic Stop” requires two merging traffic lanes. As one driver tries to merge into the next lane, he is waved forward by a car who proceeds to crash into the unsuspecting driver, later claiming they never realized the person was going to merge lanes.
- The "Sideswipe" involves a victim car who drifts into the adjacent lane while making a turn. The perpetrator of this fraud rushes to crash into the car that just drifted into his/her lane. Claiming innocence, the perpetrator then submits a claim to their insurer.
- “Shady Helpers” this type of fraud usually happens after a genuine crash has occurred. A fraud runner will solicit a crash victim and advertise the services of specific repair shops, chiropractors, or lawyers. These, in turn, will submit fraudulent claims on the victim’s behalf or deceive the victim into undergoing unnecessary treatments or lawsuits.
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Florida is the only state that has specific legislation against faking a car crash in order to receive insurance money. Other states have passed or are eyeing diverse legislation targeting efforts by gangs to bring in real and fake crash passengers to lodge phone crash-injury claims. At least 15 states and the District of Columbia have passed laws targeting runners of crash gangs or soliciting of real auto crash passengers.
- North Carolina Department of Insurance, “Department of Insurance Investigators Break up Alleged Staged Accident Ring.”, North Carolina Department of Insurance, September 8, 2011
- Lascher, Edward L. and Michael R. Powers. “The economics and politics of choice no-fault insurance.” Springer, 2001
- Dornstein, Ken. “Accidentally, on Purpose: The Making of a Personal Injury Underworld in America.” Palgrave Macmillan, 1998, p.3
- Danielle A. Alvarez, “Florida officials, insurers demonstrate staged car crash”, “Sun Sentinel”, September 15, 2011
- Lesch, William C. “Consumer insurance fraud in the US property-casualty industry.” Journal of Financial Crime, 1993
- Dyer, N. “Staged Traffic Collisions and Automobile Insurance Fraud.” Police Chief Journal, Volume:61 Issue:7. July 1994. P.51-54
- , "Scott signs Florida no-fault fraud legislation"]
- Goldblatt, Howard. "Laws solicit jail for soliciting crash fraud", "Journal of Insurance Fraud in America", Spring 2012, pg.23