Investigation Indicates Widespread Fraud in the New York City Towing Industry

New York City Department of Consumer and Worker Protection (DCWP) Commissioner Lorelei Salas has announced an investigation into the tow truck industry that suggests widespread insurance and workers’ compensation fraud.

DCWP is in the process of notifying approximately 130 tow truck company licensees – a quarter of all licensees – of its intent to revoke their licenses. Each licensee will have an opportunity to meet with DCWP to defend the charges and submit documents in support of their defense. DCWP will issue final determinations after reviewing all defenses.

“The tow truck industry already has a reputation for predatory practices, and our investigation has led us to believe that they are also putting both their customers and workers at risk with falsified insurance and workers’ compensation documentation,” Salas said in a DCWP press release. “These companies not only potentially committed fraud but endangered the public and their workers. We will do everything in our power to shut them down.”

An ongoing legal investigation indicates that these companies have likely committed various acts of fraud, including:

• submitting fraudulent certificates of liability insurance;
• having less insurance than indicated on their license application and as required by law;
• falsely listing someone other than the true owner of the company as the owner of the tow truck company;
• submitting fraudulent insurance ID cards; and
• claiming to have insurance policies and/or workers’ compensation coverage that doesn’t exist

DCWP currently licenses 512 tow truck companies. A tow truck company license is required if a business moves or removes disabled, illegally parked or abandoned motor vehicles or vehicles involved in accidents by another motor vehicle for direct or indirect compensation.

As part of the application process, companies must have personal and property liability insurance for tow trucks and submit a copy of their insurance certificate. Licensees must notify DCWP within 10 days if their insurance policy is cancelled, expires or is terminated for any reason. Companies must also provide proof of workers’ compensation insurance or a certificate of exemption if they are not required to maintain it.

Last year, DCWP conducted more than 1,830 inspections of tow truck companies and issued 214 violations, suspended 22 licenses and revoked 10 licenses. DCWP provides tow truck companies with a checklist of what inspectors look for to help them avoid violations. DCWP also received more than 1,448 complaints last year about the industry, making it the second most common complaint category.

DCWP’s case was handled by Agency Attorneys Hillary Scrivani and Emily Hoffman, supervised by Senior Enforcement Counsel Haeya Yim of the Office of Labor Policy & Standards, which is led by Deputy Commissioner Benjamin Holt. DCWP’s investigation is being handled by the General Counsel Division, which is led by General Counsel Tamala Boyd and Deputy General Counsel Michael Tiger.

Source: The NYC Department of Consumer and Worker Protection