Cape Breton Regional Municipality (CBRM) is putting a proposed tow truck bylaw on hold, as both insurers and towing companies debate over how rampant fraud is in the region.
The bylaw got its first reading in June 2020 and was sent to the province for approval. It was adjusted and while the city council was ready to give it another reading earlier this year, it decided to call it off when tow truck operators called for further consultation. Cape Breton regional police first requested the bylaw last year, in response to cases of doubling billing and overcharging for towing and storage fees, as well as additional administrative costs.
The draft of the bylaw contains several new regulations, including those that concern towing companies, their vehicles, and drivers. Once implemented, the bylaw would set towing and storage fees at lower levels than they currently are, which has some towing companies worried.
Seven towing companies signed a letter to CBRM, indicating that they are against certain provisions in the draft bylaw, such as the lowered rates, CBC News reported. Heather Llewellyn, the executive director of the Roadside Responders Association, also expressed the group’s opposition to the bylaw, and told CBC News that insurers are “trying to flex their muscle on the tow truck industry.”
Meanwhile, insurers have shown support for CBRM’s bylaw. The Insurance Bureau of Canada (IBC) sent its own letter to the city council which said that it is in support of the bylaw. IBC also mentioned in its letter than the unregulated towing industry is a “feeding ground for the unscrupulous” that includes “kickbacks ... and secret payments” that are contributing to the increase in auto insurance costs.
“Increasingly, across Canada and the United States, the scene of a vehicle collision is no longer about helping individuals in need. It is about the cascading opportunities arising from that first tow; kickbacks, referral fees, and secret payments that all work to inflate insurance claims,” said IBC Atlantic vice president Amanda Dean in the letter to the CBRM.
Dean also told CBC News in an interview that while there is little to no evidence of towing services-related insurance fraud in CBRM, it does not mean it is not happening.
“In my letter, I did not allude to the fact that there’s kickbacks and things going on in CBRM. There could be. There might not be,” she said.
“But what the insurance industry has observed in North America is that when towing and storage becomes a bit of an issue, there is opportunity for kickbacks to occur.”
The vice president added that it is not uncommon in Nova Scotia for drivers to receive exorbitantly priced invoices with very little to no explanation for towing or storage fees.
“We’ve all seen the stories coming from Ontario, but we shouldn’t be naive enough to think that there’s not fraud happening within our own province,” she concluded.
