Lake County News, CA – Bill targets illegal extended car warranty robocalls and other unlicensed insurance scams
State Sen. Susan Rubio (D-Baldwin Park) on Tuesday introduced legislation, sponsored by Insurance Commissioner Ricardo Lara, that would help consumers who are victims of insurance scams, including the illegal robot “we’re trying to contact you about your car’s extended warranty”. calls.
The legislation would help victims recover their losses from insurance sellers not licensed by the California Department of Insurance to negotiate insurance.
It discusses common scams such as illegal telemarketing sales of extended automobile warranties to consumers and illegally collecting premiums for workers’ compensation insurance from businesses, among other unscrupulous acts on unsuspecting consumers.
SB 1040 would give the insurance commissioner the ability to order restitution to consumers from unlicensed insurance sellers who violate California law, resulting in larger refunds to consumers.
The Department of Insurance estimates that unauthorized activities cost Californians millions of dollars each year.
For example, hard-working Californians have paid thousands of dollars for extended warranties sold illegally by unlicensed companies, only to have their claims wrongfully denied and then have to pay again for costly repairs. Individual losses of several thousand dollars per victim can add up to massive fraud.
Under current law, the Insurance Commissioner can order unlicensed sellers of insurance to cease and desist and pay a fine of up to $5,000 per day, but cannot order such unlicensed sellers to reimburse consumers for the losses they have caused, such as the direct premium they have misappropriated. and the financial losses suffered by the consumer when he thought he was otherwise covered by insurance.
“We’ve all received robocalls trying to illegally sell us extended car warranties, but so far my department’s hands have been tied trying to order reimbursement to the victims of these illegal insurance scams” said Insurance Commissioner Ricardo Lara. “SB 1040 will give my department the ability to order restitution for seniors, consumers, and small businesses who fall prey to unlicensed insurance sellers, especially during this pandemic.”
“We need to make it easier for victims of insurance scams to recover the money they have lost,” said Senator Rubio. “My top priority as chair of the Senate Insurance Committee is to protect consumers, and insurance fraud can be disastrous for individuals and small businesses. Meanwhile, these scams are getting more and more sophisticated. I am proud to work with Insurance Commissioner Lara on SB 1040 to give Californians more power to recoup their losses.
Department of Insurance investigations revealed numerous cases of insurance premium theft, embezzlement and fraud by unlicensed insurance sellers specifically targeting vulnerable communities, such as the elderly, immigrants and historically underrepresented communities. In many cases, small businesses have been left without insurance coverage and business owners’ livelihoods have been put at risk.
Here are some examples of illegal acts by unlicensed insurance sellers leading to fraud:
In 2021, an Insurance Department investigation led to the arrest of an unlicensed insurance agent who provided falsified workers’ compensation certificates and pocketed premiums, leaving businesses without injury coverage workers.
In 2020, the Department of Insurance issued a ceasefire against an unlicensed company that was illegally selling extended automobile warranties (also known as “vehicle maintenance contracts”) to more than 1,000 California drivers, many of whom are seniors, for more than 2 million dollars. .
In 2020, the Department of Insurance issued a cease and desist against an unlicensed Southern California agent after a consumer who thought he had coverage suffered an uninsured residential loss of $100,000.
In 2019, an Insurance Department investigation led to the arrest of an unlicensed insurance agent for allegedly stealing $174,000 in premiums from truck drivers and charter bus companies.
The Department of Insurance has obtained compensation in some cases, but only through court settlement. Because in most cases consumers must pursue their recovery on their own, and the barriers to doing so can be significant, most funds illegally stolen in unlicensed insurance fraud will not are never reimbursed to injured consumers.