One evening last month, as custodian Tracy Martin took in a Detroit Pistons game at the Palace of Auburn Hills, her cell phone rang. “They’re towing your car,” her husband, who is paralyzed, told her. Later, when Martin arrived home, she found a flyer left behind by the Highland Park Police, which along with the police departments of neighboring Ecorse and Hamtramck, belonged to the COBRA Multijurisdictional Auto Task Force.
The leaflet, placed where her 2004 Ford truck had been parked, explained that Martin’s vehicle had been towed as a result of auto insurance fraud; it also listed a number for her to call.
“They said I couldn’t get my vehicle back, I have to wait to get it at auction,” Martin said, recounting that first conversation. “Then I talked to someone else who gave me an appointment to talk to a detective, but [he said] my best bet was to be ready to buy it back at auction.”
A task force representative told Martin her vehicle was towed after an insurance company reported her fraudulent policy to the Michigan Secretary of State, which checks proof of insurance when it issues license plates. The Secretary of State, in turn, was required to contact the police after it was notified of the fraud. So Martin called the Secretary of State’s office, and spoke with someone who told her the office “doesn’t tow vehicles for insurance fraud.”
With no apparent recourse to retrieve her car, Martin has resigned herself to buying it back at auction. Authorities have not given her an auction date.
“I called Progressive,” she said, “and they’re like, it’s a whole lot of you all in Detroit. There are many victims there.”
Martin was taken in by a widening scam in which crooks, posing as auto insurance agents, prey on working people struggling to find affordable policies. Under the scam, the perpetrator offers auto insurance for a low price — low because the scammer, posing as a broker, will buy an authentic policy using fraudulent means of payment, keeping the policy just long enough to collect a proof of insurance card.
The racket is a growing problem in New York City and South Florida, according to an insurance industry group, but seems most prevalent in Michigan, where premiums are inflated by a state mandate that drivers purchase insurance plans that have unlimited lifetime medical benefits, among other features. Victims in Michigan are thrown even deeper into crisis when police, as is common there, accuse victims of being in on the scam and seize their vehicles and other assets under civil forfeiture laws.
The scam and seizures show how crooks and cops can end up working in concert to further imperil those already on the economic brink. Indeed, in this case, low-income residents are pinched at every turn. They start off with especially high insurance premiums, consumer advocates argue, because insurance companies sometimes charge people in low-income communities more for auto insurance in a practice some have labeled modern redlining.
Bogus agents exploit the need for cheaper policies by selling insurance that’s too good to be true, leaving victims financially exposed, for example, in the case of an accident. As if all that weren’t enough, the police then turn on the victims of the fraud, who are far easier to track down than the original perpetrators.
“You have a blend of crooked agents selling innocent, squeezed drivers bogus policies and insurance cards, and high insurance premiums,” said James Quiggle of the Coalition Against Insurance Fraud, a group that receives funding from insurance companies.
Progressive Insurance outlined the scam in a written statement, expanding on what the company told Martin: “In many of these cases, fraudsters act as sham insurance agents and set up real insurance policies for unsuspecting consumers but with invalid forms of payment that cause the policies to be cancelled for non-payment. It can be very hard for companies to detect this type of fraud because the down payment and the policy information appear to be valid. The bogus seller then walks away with money in their pocket and the consumer is left hanging.”
The consumers left hanging are often working class people such as Martin, whose “agent” was a man who called himself Johnathan Brown. The number Johnathan Brown provided to Martin is now disconnected.