Consumer Law

Louisiana suit claims State Farm emphasizes costs over safety with preferred auto repair shops

A lawsuit filed by the state of Louisiana accuses State Farm of steering customers to preferred repair shops for damaged vehicles, in violation of state unfair-practices and monopolies laws.

Louisiana Attorney General Buddy Caldwell filed the suit Tuesday in state court in Baton Rouge, report the New Orleans Times-Picayune and the Associated Press. Though the suit targets only State Farm, Caldwell said an investigation by his office has revealed “hundreds of violations, and they include not just State Farm but the industry itself.”

Repair shops on the preferred providers list have to adopt pricing structures and labor rates dictated by State Farm, the suit (PDF) says, and they have to use State Farm’s “Parts Trader” software program when obtaining replacement parts.

“Upon information and belief,” the suit says, “State Farm adjusters have become increasingly involved in the everyday tasks performed by repair facilities, including but not limited to locating specific replacement parts and mandating that repair facilities use the specific parts identified by the adjuster, even when the repair shop believes that such use is neither safe nor appropriate.”

The suit also claims that State Farm ranks its preferred repair shops, increasing pressure to focus on repair costs rather than consumer safety. A press release has more details.

State Farm issued this statement to the Associated Press: “The description in this lawsuit is not in line with State Farm’s mission to serve the needs of its customers, and our long, proud history of achievements in advancing vehicle safety.”

Updated at 8:15 a.m. to correct wrong word in fourth paragraph.

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