Thursday, November 28, 2013
Highway robbery: Pirates are costing Ontario drivers billions
These tow trucks are specialized machines, bristling with radio antennas and hydraulic tail stingers that can whisk a car away in minutes. The drivers tune in to the police frequencies and wait, hoping for a payday that could range anywhere from $150 to five figures, depending on their luck and connections.
For drivers who crash or break down on Highway 401 in Ontario, it can go one of two ways. If lucky, their vehicle will be towed away by a reputable operator who will charge a reasonable amount for the service. If not, they may find themselves plunged into a netherworld of extortionate fees, kickback-laden referrals, and barbed-wire impound lots where their car is held hostage until the bill is paid.
Running through the heart of the country’s biggest city, Highway 401 is the Grand Banks of towing – and sometimes, its Somali coast. According to a provincial task force that investigated insurance fraud, unscrupulous tow truck operators are at the front line of a black-market enterprise that costs Ontario drivers $2 billion each year.
“I think the towing industry is worse than those guys in Somalia,” says Doug Nelson, executive director of the Provincial Towing Association of Ontario (PTAO). “At least the pirates let you know what they’re up to. They stick a gun in your face and take your ship and your money. When it comes to towing, you don’t even know you’re getting robbed until you see the bill.”
The provincial task force calculated that fraud adds an estimated $700 to the insurance bill of every driver in the Greater Toronto Area.
“There are responsible companies, and there are flat-out pirates,” says Rick Dubin, vice president, Investigative Services, at the Insurance Bureau of Canada. “It’s luck of the draw.”
Although there are plenty of reputable tow operators, there are also pirates lured to the business by lax regulation and the potential for windfall profits. Drivers can earn commissions of up to 20 per cent on everything from bodywork to legal services to medical care. Some drivers have told the PTAO about doctors offering them a flat fee of $1,000 for bringing in a new patient after an accident.
“There are guys who make $10,000 a call,” says Nelson. “They work the system.”
My first glimpse into the darker recesses of the towing industry came while researching a story on insurance fraud. Among the people I met was a tattooed, 385-pound tow truck driver who showed me the workings of an ugly roadside game that included padded bills, under-the-table payments from paralegals, rehab clinics and body shops.
One trick: Drivers sometimes cross city borders to evade the rules that exist in certain jurisdictions.
“You might get towed out of Toronto by a truck from Richmond Hill, and he takes you to Markham,” says David Zimmer, Ontario Minister of Aboriginal Affairs, who has worked on province-wide legislation that would regulate the towing industry. “So whose rules apply?”
In many cases, the answer is: no one’s. There are 444 municipalities in Ontario, and only a few have rules covering the towing industry. “Anyone can buy a tow truck and start hauling away cars,” says Zimmer. “It’s not a good situation.”
Zimmer introduced two private members bills that would have created standardized province-wide regulations for tow operators. One bill fell by the wayside when the legislature was prorogued, and the other was derailed by an election.
Depending on where they are, a motorist involved in a crash or breakdown may encounter entirely different circumstances. In downtown Toronto, police have contracts with five established towing companies that follow posted rates, with the average cost of a tow and impound about $165. But in a municipality with no rules, all bets are off -- and on the 401, which runs through multiple regions, you are in a legislative no-mans-land.
“It’s a Wild West situation out there on that highway,” says Sgt. John Winter, a police officer who runs Toronto’s towing impound program. “The consumer definitely does not come first.”
There is no shortage of horror stories. Among the cases in Nelson’s files is a woman who was picked up on the 401 after crashing in Whitby, only to have her car towed more than 70 km. After the crash, the woman told the tow truck driver to take her car to a nearby GM dealer. Instead, he towed it to Mississauga, where a body shop paid him for bringing in business. When the woman found out where her car had gone, she ordered the towing company to return the car to the Whitby GM dealer. The company complied, but refused to release the car until it was paid $2,400 for the two-way trip across the GTA.
Then there’s the case of Dennis Ablett, an IT executive whose son and daughter both had minor accidents near their home in Thornhill back in 2010. The accidents happened just days apart, and an odd choreography was repeated at each scene: Ablett arrived to find a damaged car, a distraught child, and a tow truck that had magically appeared, even though no one had called for one.
In both cases, Ablett told the drivers that he was a CAA member and would wait for a tow, because the cost would be covered by his membership. The drivers told Ablett that the scene had to be cleared, so he couldn’t wait. When Ablett asked what it would cost, the drivers told him not to worry, it would be covered by his insurance. Both cars were towed less than 10 km. The bill for one car was $1,400, and included fees for towing, storage, and crossing a municipal boundary (the bill was later reduced to $1,080). The second bill was for $610.
“I had no idea that anyone could try and charge that much for such a simple service,” Ablett says. After seeing the bills, Ablett sent a letter of complaint to Kathleen Wynne, the provincial Minister of Transportation at the time, writing: “I suggest that if such imaginative, inflated and usurious rates were charged in any other area, the police would swoop in and arrest the perpetrators for criminal activity.”
Among those pushing for industry reform are Ontario’s police chiefs and the PTAO, a group of tow operators who believe that the business needs to clean up its act before public outrage leads to draconian legislation.
George Gladish, a former police officer who works as an investigator with the IBC, is amazed at the overcharging and scams he’s uncovered. “Kickbacks have been going on forever,” he says. “They’re built into the game.”
Joey Gagne, owner of Abrams Towing, which operates 150 trucks, is frustrated by the under-handed tactics of the roadside pirates: “It’s hard to get people to come into the industry because of its image,” he says. “That’s unfortunate, because there are good people here. Having a negative experience with a tow operator is no different than having a bad experience at a restaurant. There are bad waiters, and there are bad tow truck operators, too.”
Although the fraud cases drive up the cost of insurance, the most obvious annoyance for the average driver is a lack of consistent pricing, and towing bills that can hit the roof.
While researching the industry for his private-members bills, Zimmer says he saw towing charges that reached $3,000.
“There’s a lot of anger toward the industry,” he says. “And it’s easy to see why. A lot of consumers have been abused.”
Drivers who opt for a freelance tow at an accident scene may face a bewildering array of charges. Although reputable companies follow standardized rate schedules, some operators specialize in bill inflation and fee add-ons. Among the charges you may face: an arrival fee (for showing up on the scene), an inspection fee (for looking your car over before towing it), a hook-up fee (for connecting your car to the truck), a drop charge (for releasing your car), storage fees (for holding your car at the impound lot), and mileage fees (which add cost for distance travelled). There may also be surcharges for using a dolly, for towing a car from a multi-lane highway, and for waiting time.
How to protect yourself from a roadside pirate
Tow truck operators are often the first to arrive at the scene of a crash or breakdown, and an unscrupulous one can take advantage of a disoriented driver. Once your car is hooked up, a driver may try to direct you to companies that pay them referral fees and kickbacks for everything from bodywork to medical care. They may also charge unreasonable fees for towing, storage and other services, and hold your car hostage until you pay. To protect yourself:
If you crash or break down, call your insurance company’s hotline and ask to be referred to an approved tow operator and service centre.
Do not allow a tow operator to hook up your car without the approval of your insurance company.
Join a reputable roadside assistance program such as CAA. In exchange for a fixed annual fee, you will receive several tows as needed (details vary by specific program). Some car manufacturers also offer roadside assistance programs.
If your car is impounded by a tow operator who is demanding unreasonable fees, you can pay the contested amount to a provincial court, ask the court to release the car, and wait for a ruling.
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