Getting into a crash is always a bad experience, but sometimes it gets even worse. The other driver might claim you were at fault when you know you didn’t do anything wrong, or his passengers could start complaining about injuries even though the collision was minor.

If you find yourself in this situation, you may be the victim of a staged collision, a particularly nasty form of insurance fraud that has become a multi-billion-dollar problem in the country.

Much of this is the work of organized crime, according to Rick Dubin, vice-president of Investigative Services at the Insurance Bureau of Canada (IBC). It’s also a very wide web, involving several levels of criminal activity.

“They’re intentionally causing the staged collisions, and also the fraud that exists along the whole service supplier chain,” Dubin says. “There’s also the tow truck driver that brings it to a special shop that causes additional damage or bills for repairs that weren’t done, and all the kickbacks along the way.”

A recent study suggests auto insurance fraud costs as much as $1.6 billion per year in Ontario alone, and Dubin says that’s considered to be a “conservative number.”

The scam usually starts with a minor crash, sometimes involving a stolen car that’s had its vehicle identification number (VIN) replaced with one off a similar vehicle from a salvage yard. Several people get in, and then the driver looks for an innocent victim.

The idea is to get you into a position where it’s possible to make the crash look like it was your fault. Dubin says there are several scenarios. If you’re waiting to make a left-hand turn, the oncoming driver might wave you through, but then accelerate and hit you, which Dubin calls the “left-hand bullet situation.” This is often done in parking lots as well, with drivers stopping to let someone out of a spot, and then ramming them.

Another common tactic is the “swoop-and-squat,” where a driver cuts in front of you and then slams on the brakes, causing a rear-end collision.

Once the crash occurs, your troubles may be just beginning. The crime ring may have a tow truck driver on call, who quickly arrives and offers to tow you to a body shop he “knows will do a good job.” Some of his towing fees—and expect them to be hefty—will be skimmed off by the crime ring. The body shop will then bill big dollars to your insurance company for their repairs, which will be done as cheaply as possible for extra profit.

Meanwhile, all those passengers in the car are now going to doctors who are getting a piece of the pie to diagnose injuries, and prescribe expensive treatments and rehabilitation, that your insurance company may have to cover. They may also go to clinics that forge the signatures and use the registration numbers of innocent medical practitioners who aren’t even aware their names are being used.

In the Greater Toronto Area, which Dubin calls the “staged collision capital of Canada,” IBC has identified more than 300 clinics suspected of perpetrating insurance fraud.

So how do you protect yourself? The first step is to be cautious. Don’t accept the right-of-way when it’s not yours, and never turn in front of another vehicle if the driver waves you through. (Even if that driver is simply being polite, your actions can confuse other drivers and create a dangerous situation.)

If you are involved in a crash, watch for the warning signs. Beyond the obvious swoop-and-squat, be suspicious if you’re involved in a relatively minor collision but notice any of these:

  • the driver insists on calling emergency vehicles, especially an ambulance
  • passengers complain about neck and back injuries, particularly when emergency crews show up
  • a tow truck appears on the scene almost immediately
  • the tow truck driver, or the person who hit you, recommends a repair shop
  • the other driver’s insurance policy was recently issued, especially if the car is older
  • the driver tells police an inaccurate account of what happened
  • “witnesses” suddenly appear when the crash happened in an isolated area.

Dubin suggests that if you suspect you’re the victim of a staged collision, inform the police. Call your insurance company as soon as you can, to alert them to the possibility that they’ll be seeing a fraudulent claim. Do not use the body shop endorsed by those involved in the crash. Instead, ask your insurance company for a list of recommended shops.

If you are injured in the crash, visit your own doctor, not one the other driver “knows” (that goes for lawyers the other party might recommend, too). Do not sign any blank medical or benefit forms. If you go to a clinic for rehabilitation or treatment, keep a record of each visit, including who treated you, what was done, and how long each visit was. Keep in touch with your insurance company to be sure it’s paying only for services that were actually performed. Be diligent: those fraudulent bills add up.

“Organized crime works on volume,” Dubin says. “They try to stay below the radar, but if they do enough of these and send enough people to clinics, it may be just $10,000 here or there, but with volume, they’re making large amounts of money.”

At any time, if you suspect there’s something fraudulent about a crash or how it’s being handled, you can call IBC’s anonymous tips reporting line at 1-877-IBC-TIPS, or your local police or Crimestoppers.