It used to be that Americans loved their cars. But tough economic times have put a strain on the relationship cash-strapped drivers now have with their vehicles. Take, for example, the South Carolina man who earlier this year filed an insurance claim, saying his 2002 Ford F-150 was stolen. Police quickly discovered it only miles from his house, engulfed in flames. Investigators couldn't find any signs of forced entry, but what they did discover was that the owner was behind on his payments, had refinanced the truck twice and had lied about it when asked. In a similar incident, a California woman, who was no longer willing to fuel up her 2002 GMC Yukon said it disappeared from the parking lot. Actually, she had arranged to have it chopped up in Mexico and sold off in parts. And then there's the Arizona man, who couldn't afford the payments on his 2006 Dodge Charger who told his daughter's boyfriend that he would give them his blessing to marry, if the boyfriend would only torch his car for the insurance money.
Theses cases are a handful in a growing pool of what are referred to as "owner give-ups," says Frank Scafidi, a spokesman for the National Insurance Crime Bureau. Whether it's torching, drowning or handing cars over to chop shops, more owners are looking for ways to unload their vehicles, then filing insurance claims saying they've been stolen. According to NICB, such give-ups are up 24 percent in 2009, compared to 2008. Claims related to suspicious vehicle fires and arsons--the most common way to get rid of a vehicle--are up 27 percent for the same period.
There are no definitive statistics that prove the economy is at fault for the rise in this form of fraud. But there is some early evidence that suggests it is a contributing factor. One report by NICB that looked at owner give-ups from 2004 to March 2008 showed a direct correlation between an increase in this insurance crime and the then-rising cost of gasoline. The dumped vehicles of choice were often gas-guzzling SUVs and pickup trucks. Yet, even with the price drop in the second half of 2008, the uptick of cases has largely continued because of the overall economy, says Jim Quiggle of the Coalition Against Insurance Fraud. In most of these cases, the vehicle has become too expensive to fix, the owner is behind on payments or they have simply taken on a monthly payment they can't afford. "Normally honest people are cracking under financial stress," he says. "[They're] hoping for a quick fix by illegally dumping their unwanted cars for an insurance bailout."
Most states have been impacted by this problem. California and Texas, in particular, have experienced high rates of potential owner give-up cases, some of which have been perpetrated by fraud rings that burn cars for people looking to have the issue taken care of by a professional. Others have left it to Mother Nature. In the wake of Hurricane Gustav last year, Mississippi police found cars left suspiciously close to seashores, in the path of raging weather. Steven Nachman, Deputy Superintendent for Frauds and Consumer Services for New York State, says they had 96 arrests for owner give-ups in 2007. That number jumped to 130 in 2008--a nearly 35 percent increase.
Part of the trouble is that perpetrators think it's an easy crime to commit. Most of the people who do this assume the insurance company won't see anything particularly suspicious about their claim. But Scafidi says there are tell-tale signs of owner give-ups, and while it's not nearly as common as other forms of insurance fraud, it's on insurance-company radars, given the spike. And if you don't think they'll find the evidence, think again.
Last year, a recovery team found the Chevrolet Trailblazer a woman had reported stolen less than a month before. It was at the bottom of Lake Erie. The keys were still in the ignition, and there was a rock tied to the gas pedal. "It's not worth it. When the company doesn't pay the claim, you have to cover the costs, and then there's always the chance of prosecution," he says.
The South Carolina man who torched his Ford F-150 learned that the hard way. He was sentenced to three years in prison. The California woman received 90 days in county jail. And the case of the man who convinced his daughter's boyfriend to commit fraud? The boyfriend caved and told the police everything.