BATON ROUGE, La. (Legal Newsline) - Louisiana Attorney General Buddy Caldwell filed a lawsuit on Tuesday against State Farm Insurance alleging the insurer engaged in unfair and fraudulent business practices meant to control the auto repair industry.
Caldwell alleges State Farm violated Louisiana's Unfair Trade Practices Act and Monopolies Law through the use of scare tactics to steer consumers to State Farm-preferred repair shops. State Farm allegedly forced shops to perform vehicle repairs quickly and cheaply instead of complying with consumer safety and vehicle manufacturer performance standards.
“State Farm has created a culture of unsafe business practices in which consumer vehicle repairs are performed with cost-savings as the primary goal rather than safety and reliability," Caldwell said.
State Farm allegedly directed consumers to repair providers that signed agreements with the insurer. Caldwell alleged that under the terms of the agreements, the repair shops must comply with State Farm's standards of repair. State Farm allegedly dictated the quality of replacement parts and what types of repairs could be made.
“In some cases, we’ve found that these parts are nothing more than used junk yard parts," Caldwell said. "In others, we’ve found them to be foreign knock-off parts of questionable quality. Auto repair is not an industry where you can cut corners to save a little money. It could be a matter of life and death.”
Caldwell said the suit is meant to change the culture of unsafe business practices in the auto insurance and repair industry.
“Each month Louisiana consumers give their hard earned money to State Farm under the assumption that the insurer will take care of them if an accident occurs," Caldwell said. "This simply isn’t happening. Quite frankly, State Farm has been there for State Farm, not the Louisiana consumer."