Recession Drives Boom in Auto Fraud

By Harry Kimball,  Newser Staff
Posted Jun 19, 2009 1:23 PM CDT
Police investigating a burned out Cadillac in the desert outside Las Vegas.   (AP Photo)
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(Newser) – Car-insurance fraud spurred by the recession is continuing unabated, Newsweek reports. “Give-ups”—feigning theft or arson to collect insurance money on an unwanted vehicle—are up 24% this year over last, according to an industry group. And claims stemming from suspicious car fires are up 27%. “Normally honest people are cracking under financial stress,” an insider said.

Certain parts of the country feel the phenomenon more acutely. In New York, arrests for give-ups jumped 35% from 2007 to 2008. Though it’s not the most common form of insurance fraud, the companies are watching. “It’s not worth it,” an industry spokesman said. “When the company doesn’t pay the claim, you have to cover the costs, and then there’s always the chance of prosecution.”