Damaras Gatihi was driving along Interstate 5 near Seattle in 2003, when her car was bumped from behind. Her Toyota Corolla spun around and hit another vehicle head-on. The 50-year-old nursing assistant's airbag did not open. A shady repair shop had removed her airbag and inserted a plastic cover over the empty cavity. Her body hit the steering column so hard that the column buckled. In a tragic irony, Gatihi died from massive bleeding of the heart: it was Valentine's Day.

Airbag fraud is an expensive problem for auto insurers. It also is a deadly public-safety threat that endangers the lives of drivers and passengers when dishonest body shops meddle with vehicles' airbags to make illicit profit at insurance companies' expense.

“Far more than financial fraud, airbag fraud is a public-safety issue,” said Janet Bachman, vice president, claim administration, for the American Insurance Association. “It's the equivalent of installing seat belts that are not hooked up. The unsuspecting driver may be in for an incredible awakening that could kill people.”

Nobody keeps complete data on how widespread and costly airbag fraud is, but the warning signs abound. Crooked body shops stuff thousands of fake and unsafe “remanufactured” airbags into cars throughout North America, according to the Automotive Occupant Restraints Council. In the Miami area alone, police found thousands of fake airbags, and also identified a shop that sold more than 6,000 airbag shells. One insurer received more than 350 claims for cars involved in collisions and repaired with fake airbags, the insurer told a California legislative committee last year. A survey in Los Angeles found 66 fakes in 1,200 vehicles with replaced airbags.

Scams in Many Flavors

Most airbag swindles involve larcenous auto body repair shops drawn to the hefty insurance profits. Here are two common versions:

The pullout You take your car in for repair after a minor accident. A dishonest body shop pulls out your airbag so that it seems as if the bag had deployed during the accident. The mechanic then inserts a cheap knockoff or salvaged bag after your insurer finishes the estimate for replacing the original. Or worse, the mechanic stuffs old rags, cardboard, or beer cans into your empty airbag space. The body shop bills your insurer full price for “replacing” the bag, up to $2,000 or more.

The switch The body shop removes your undeployed airbag and installs another deployed one to make it seem as if the original bag had inflated during the accident. The mechanic then puts back your original bag after the insurance company makes a repair estimate. Or, the mechanic may simply insert rags and other junk, then sell your original bag on the black market. Either way, the insurer is illegally billed for an expensive new bag and the driver's safety is threatened.

The problem can be especially acute with salvaged vehicles, ones that insurers declare totaled and sell at salvage auctions. Body shops can rebuild and resell them at hefty discounts. Up to 400,000 later-model rebuilt wrecks now roam America's roadways, according to Consumer Reports magazine.

“There's just too much profit for airbag fraud not to be on the rise,” said Larry Gamache of Carfax.com, which provides vehicle reports for used-car buyers. “Where this happens most is for new cars that have been salvaged.”

Shady, low-end repair shops often cut corners by installing shoddy or no airbags, safety groups warn. The shops can resell the salvaged vehicles through murky networks, making it hard for buyers to trace who fixed the vehicles or what repairs were done. “If a car is totaled and goes to salvage, it's anybody's bet,” said Mike Williams, a manager with the investigative unit of Farmers Insurance. “We're letting a lot of cars out of salvage yards that shouldn't be let out. And it's coming back to bite us.”

States Set Standards

Federal law does not require repair shops to replace airbags in vehicles that are repaired after crashes, nor does it regulate how safe the bags must be. The states decide what is required, but most do not have laws specifically tackling fake and unsafe airbags. This often leaves consumers to fend for themselves.

“I think it's quite weak,” said Adrian Lund of the Insurance Institute for Highway Safety. “First of all, there are only a handful of states that really even address it.” In many of those that do, it is a misdemeanor, and not a deterrent to body shops and mechanics.

Florida has, perhaps, the nation's toughest law. Anyone caught installing a fake airbag could face several criminal offenses, including manslaughter. California also forbids reinstalling deployed airbags, but only Utah requires deployed airbags to be repaired to their original condition, according to Lund. Last July, Delaware passed a law forbidding body shops to install fake or non-working airbags. The District of Columbia, Hawaii, Massachusetts, Maine, Rhode Island, Vermont, and West Virginia require vehicles to have working airbags to pass safety inspections.

Even state inspections have limits. States usually examine the airbag warning light, but do not check whether the airbag is properly installed. “You can't take the airbag apart,” Lund noted. “It would be quite expensive, and you'd be modifying stuff you probably shouldn't be modifying. So inspectors are just reading the airbag lights.”

Airbag cons may only increase in the years ahead. Federal rules now require that new cars have two frontal airbags to protect front-seat passengers against head-on collisions. Increasingly, however, car makers are adding side airbags to protect the heads of all occupants in side-impact crashes. New federal side-impact rules also are phasing in by 2009.

With so many more expensive airbags to steal, dishonest body shops may find the illicit insurance profits too tempting to pass up. The insurance industry and auto-safety advocates need to push for a tighter state safety net now. This means tough, and comprehensive, airbag laws that remove the profit incentive for body shops, the Coalition Against Insurance Fraud warned.

“The most effective airbag laws would blanket a whole range of safety risks,” said Howard Goldblatt, the coalition's director of government affairs. Among the safety measures that he suggested were tougher state airbag inspections, as well as making it a crime to install fake, deployed, and salvaged airbags, to remove functioning ones, or to stuff junk into airbag compartments. Jail time and fines should be stiff enough to discourage body shops and their cronies, he said.

In addition, he advocates that repair shops be required to have paperwork proving where they obtained replacement airbags. Police at crash scenes also should be required to note on accident reports whether airbags had deployed. Many do now, but not all.

Swift action can stem costly airbag losses for insurers but, most important, it would reduce an urgent safety threat. As Damaras Gatihi so fatally found, airbag fraud means more deadly drives for anyone who steps into a repaired vehicle.

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