March 23, 2015—Mississippi Attorney General Jim Hood has requested that U.S. Attorney General Eric Holder launch an investigation into alleged car insurance “steering” and parts requirements, the Mississippi Business Journal reported last Thursday.
In a letter dated March 13, Hood said that the intent of those practices is to pad the insurer’s bottom line.
Hood asked Holder to see if such practices not only violate the 1963 Department of Justice consent decree but also federal laws and regulations.
Hood said in the letter, according to the Business Journal, that “insurers are implementing programs which require the use of aftermarket parts or remanufactured parts, without disclosing the use of such to consumers and in spite of the fact that such parts are not of the same like, kind and quality of the original equipment manufacturer. This practice risks both the safety of the consumer, as well as the integrity of any vehicle warranties that the consumer may have otherwise.”
The Business Journal reported that Hood wrote, “body shops have reported to my office that they are pressured into accepting bid from PartsTrader for aftermarket or remanufactured part that are unsafe and far below the quality of the original equipment manufacturer.”
Contacted for comment by the Business Journal, State Farm said in a statement: “Our customers choose where their vehicles are going to be repaired. We provide information about our Select Service program while at the same time making it clear they can select which shops will do the work.”
The letter is part of a larger legal challenge to these practices. A Mississippi case, Capitol Body Shop Inc et al v. State Farm Mutual Automobile Insurance Company et al, faced a March 13 deadline to be refiled after a judge sent it back “without prejudice,” according to the Business Journal.
