Volume 13, Issue 1 - January-February 2011

Special Report

Knock, Knock
An Inside Look at Direct Marketing Methods
by Penny Stacey


“I’m not saying going door-to-door sales are immoral,
but the tactics some are using are immoral.”
—Southeastern auto glass shop owner

Door-to-door sales are nothing new. At one time, it wasn’t uncommon to encounter door-to-door pest control salespeople, those selling vacuum cleaners and more. In today’s market, items such as roofing, siding and paving often are sold this way. A salesperson might knock on a door and say, “Hey, we just installed this for your neighbor and think you could use it too.”

During the last few years this type of sales practice has spilled out into the auto glass industry and has become quite popular in certain markets. Some say this and other direct marketing efforts are affecting the industry in new ways.

At the same time as the use of direct-marketing methods has grown, the National Insurance Crime Bureau (NICB) has begun releasing reports over the last two years saying that “questionable” auto glass claims are on the rise. NICB says that “questionable” auto glass claims were up 511 percent for the first three quarters of 2010, compared with the same period of 2009.

“These are not definitive fraud cases at all,” says NICB spokesperson Frank Scifaldi. “These are cases that the member companies—of which there are more than 1,000—have the option of referring … as questionable to us.”

While some may question the accuracy of this data, which is gathered by a not-for-profit organization funded by approximately 1,000 property/casualty insurance companies, the fact that outside sources are taking notice of the industry also could give rise for concern.

The consumer press has taken notice of direct marketing methods as well. In October 2010, MSNBC’s Bob Sullivan featured the topic of “windshield bullies” in his “Red Tape Chronicles” blog. In the blog, titled “Windshield Bullies: A Growing Fraud Problem,” Sullivan writes, “They hover outside car washes, wander around office parking lots or sometimes even go door to door. They find a chip in your windshield, then launch into a hard sell for instant replacement.”

How It Works
So, how do door-to-door sales work in the auto glass industry? In some cases, teams of salespeople are sent out to neighborhoods, strip malls and other locales where they search for vehicles that need auto glass work. The salespeople often carry lists of insurance companies with them, and offer to call the consumer’s insurance company for them as a convenience—stating that the work will be completed “at no cost to the customer.” The salespeople themselves sometimes vary in position—some work directly for auto glass companies, while others work for marketing companies hired by auto glass businesses.

“The most common places that you see it happening are car washes, gas stations and door-to-door,” says one Southeastern shop owner who asked not to be identified publicly due to concerns about how it might impact his business, adding, “I realize that some people who might be using some of these methods are very honorable companies.”

National Windshield Repair Association president Kerry Wanstrath sees a difference among the methods and the ramifications of each.

“If people are at an auto service center of some sort and they notice you need a repair, that’s different,” says Wanstrath, who also serves as president of Glass Technology in Durango, Colo. “I would not put [that and door-to-door sales] in the same category, because one is obvious harvesting—the other is taking advantage of the fact that a customer is at your facility. One is going out trying to get a repair that is unsolicited and possibly not needed. In the other case, the person is in their place of business and they’re offering an additional service.”

One Gulf Coast auto glass shop owner actually had a door-to-door salesperson visit his home and attempt to encourage his wife to have some pits in her windshield repaired.

“[The salesperson] told my wife she needed to replace the windshield on our 2006 Lincoln Navigator. He brought her out and showed her what he called pits, and he told her because there were three or more pits she could get a whole new windshield for free,” said the shop owner, who wished to not be idendue to his professional affiliations. “I’m in the business and I know there’s nothing wrong with that windshield.”

Kerry Soat, founder and president of Fas-Break in Phoenix (a locale many say is a hotbed of car wash activity), says he’s been approached as well.

“[Some are] very aggressive, even with me,” he says. “I’ll have Fas-Break Windshield Repair on my shirt and the guy says, ‘well, it’s free—it doesn’t cost you a dime.’”

“[Windshield bullies] are not reputable vehicle glass businesses, but rather those
who prey on policyholders, using high-pressure tactics to coerce them into filing a
vehicle glass claim at gas stations, car washes or by going door to door.”
—Melina Metzger, Safelite

But Is It Wrong?
So is this practice fraudulent, illegal, immoral, unethical or none of the above? The rub seems to occur when such salespeople allegedly identify auto glass damage that doesn’t need to be repaired, or even allegedly create the damage themselves.

In October 2009, a Florida woman who was working for a marketing company doing sales for Coast to Coast Auto Glass (C2CAG) was arrested for allegedly damaging the windshields of two vehicles and then offering to have the windshields repaired “at no cost.” The alleged damage occurred in the parking lot of a pawn shop in Hernando County, Fla. The defendant, Jenna Parslow, had advised local police that she made $45 for every windshield she referred to the company, according to police reports.

In some cases, the door-to-door salespeople have violated local “peddling” laws. In April 2010, two men were arrested in Fort Myers, Fla., for allegedly “peddling” windshield replacement services without a license. The two, Edward Grano and Justin Herrero, who were identified as working for a company called Tag Promotions, told police they were “selling windshields” door-to-door, and that they “help people call their insurance compan[ies] to replace their windshields … ” (See information at the end of this article.)

These aren’t the only reports of such practices. In June 2010, the police department in Charleston, S.C., issued a warning to local residents to beware specifically of C2CAG representatives going door-to-door, explaining that they didn’t have the proper peddling permits.

In July 2010, TV station KCRA in Folsom, Calif., reported on issues with “high-pressure sales pitches by some auto glass repair companies.” The report mentions the company Chipio, which is based in Phoenix.

Likewise, in mid-January, a Richmond, Va., station featured a story warning of “windshield bullies.” “In some cases we’ve heard reports that [the salespeople] have been at a car wash and said ‘oh I see your windshield is broken,’” says Va. state trooper Sgt. J.C. Miers, who was quoted in the original report. “We’ve not heard of any specific reports in Virginia where they’ve gone through a neighborhood and actually broken the glass, but [I’ve heard] in other states they have.”

Harvesting or Just Good Sales Strategy?
A term almost as familiar to the industry as “windshield bullies” of late has been that of “claims harvesting,” and some would say the practices of door-to-door sales, car wash marketing and parking lot canvassing fall into this category. “In general, the concept, just because most of us don’t like it, isn’t wrong if you do it ethically,” said the Gulf Coast shop owner. “We’re all trying to harvest claims. It’s no different than Safelite saying in their ads that [they will] ‘repair your windshield at no cost to you.’”

Independent Glass Association president Alan Epley of Southern Glass and Plastic Co. in Columbia, S.C., suggests that perhaps the growth in the use of direct marketing has been spurred by the existing auto glass claims structure (see related story on page 8).

“Is it possible that the companies engaging in direct marketing are trying to secure customers before policyholders report the claim through a process that is designed to steer as many claims as possible to shops owned by the third-party administrators (TPAs) or preferred by insurers?” he asks.
Soat also questions what can be considered harvesting.

“Is it claims harvesting when you merely walk up to someone and say ‘you know, you have a chip in your windshield?’” he asks. “To the insurance industry, that is claims harvesting, but the fact of the matter is, we’re saving that consumer’s windshield.”

Others say some so-called “windshield bullies” take what many call “claims harvesting” a step further—not only by going door-to-door and advising consumers that the service will be completed at no cost to them, but also by focusing on the elderly, those who can’t speak English
well, new drivers and other similar populations.

“They use aggressive—and in some cases fraudulent—tactics to solicit vehicle glass claims, preying on new drivers, the elderly and folks who do not speak fluent English,” writes Safelite, the largest auto glass retailer in the United States, in a brochure it developed for distribution to insurance agents.

“[Windshield bullies] are not reputable vehicle glass businesses, but rather those who prey on policyholders, using high-pressure tactics to coerce them into filing a vehicle glass claim at gas stations, car washes or by going door to door,” says Safelite spokesperson Melina Metzger. “Their approach is typically pushy, and … in some cases their actions are fraudulent.”

But Auto One president David Zoldowski points out that it’s not just the tactic used that makes a “windshield bully”—but whether deception is involved.

“I would consider the bully to be the person who dives in a person’s glove box [for his insurance card] or threatens [a potential customer] with safety issues if there’s a crack going across the windshield, deceiving the customer that they have to have a repair, or somebody that would commit fraud,” he says. “But I don’t think someone who cleans your windshield and notices you have a chip [and offers to repair it] is necessarily a bully.”

The NICB recently ran a radio ad (which actually was produced by Safelite) during several national radio programs about the “windshield bully” issue. In the ad, the voice of an elderly woman is heard calling her insurance company to explain that she thinks her windshield has been replaced unnecessarily after an encounter at a gas station.

“I don’t know for sure when [my windshield was damaged],” she says. “They said yesterday, but I don’t know … I don’t like this. I don’t think I need a new windshield. I don’t know what they’re up to. Well, they put it in before I had a chance to talk to my insurance company or anything. Boy, I’m not stopping at this station anymore.”

“NICB has been getting a lot of complaints from our member companies about all these glass claims,” says Scifaldi, who is based in Sacramento. “I even see it out here, I’ll go up to a gas station and I’ll see someone offering free glass repair.”

The Southeastern auto glass shop owner, who’s seen the elderly being approached in his area by such salespeople, questions the potential longevity of the model.

“You can’t build a company on deceit or practices that are immoral,” he says. “And I’m not saying door-to-door sales are immoral, but the tactics that some of them are using are immoral.”

“A Black Eye”

But what about those who engage in such practices in reputable ways, and those who don’t engage in them at all? Are those businesses affected by this phenomenon? According to Metzger, this practice still can create an impact on the industry at large.

“‘Windshield bullies’ not only hurt consumers and insurance companies, they hurt the reputation of all other vehicle glass shops that work hard everyday to serve their customers,” she says.

Independent shop owners echo this sentiment as well.

“They’ve given a black eye to the industry,” says the Gulf Coast shop owner.

“We’ve made such great strides with [the AGRSS Standard], and then this just takes us back to prehistoric times,” adds the Southeastern representative. “It’s bad for our industry, it’s bad for the gains we’ve made, and the person it’s worst for is the consumer.”

Obviously, replacing windshields that don’t need replacement generally is considered fraudulent, but are there other ramifications?

“A lot of these guys are independent contractors, so continual training isn’t happening,” says the Southeastern shop owner.
“At our company, training is a process that never ends. You need to be talking about it and repeating it and it never sleeps.
It’s a very important job and we all know how important a proper installation is to a vehicle … Our industry is hard enough as it is. You can make a mistake trying to do everything right, and, when you’re purposefully circumventing the rules, the consequences are life and death. There’s really no excuse.”

This particular shop owner actually hired a former “door-to-door” installer in early 2010, but says he quickly learned this was a mistake.

“He only stayed with us for a few days, because he wasn’t willing to comply with our procedures,” says the shop owner. “He quit because we were telling him to wait before he set this windshield or that windshield; he just didn’t want to change to that extent.”

The Gulf Coast shop also has interviewed several former door-to-door installers.

“I always ask, ‘how about the windshields you replace?’” he says. “And they say 25 percent or so do not need to be replaced, and most of the [technicians] who have a conscience—and most people do—couldn’t stomach it. I try to never judge a company by [its] ex-employees, but it’s been 100 percent of them that say this and that they’re really asked to do things that probably shouldn’t be done. They say, ‘I had to feed my family and I needed the work.’”

Others have seen safety issues brought to light by “callbacks.”

“We’ve had more than a few [jobs brought in for correction],” says the Southeastern shop owner. “And we’ve had insurance companies call and say ‘let’s take a look at this.’”

“In general, the concept of car washes and going door to door, just because
most of us don’t like it, isn’t wrong if you do it ethically. We’re all trying to harvest claims.
It’s no different than Safelite saying [they will] ‘repair your windshield at no cost to you.’”
—Gulf Coast shop owner

Insurers indeed have taken note of the issue as well, says the Gulf Coast shop owner.

“The impact on the industry in my mind is that it’s given the insurance industry one more reason to brand all the glass shops as bad …” he says.

Some insurers even have made changes related to how they handle claims in light of the alleged rise in questionable auto glass claims. American Family, GEICO and USAA all have announced that they may require pre-inspections in some cases prior to authorizing windshield work.

“Basically we started this program because we received feedback from our members that some of them felt like they were coerced or pressured to make glass claims when, in reality, there may not have been any damage to their glass,” says USAA spokesperson Rebecca Hirsch. “ … We enacted this to protect our members from any fraudulent activity.”

Hirsch says that since USAA launched its pilot inspection program in December 2010, it has found it beneficial in some cases for preventing fraud.

“We’re going to keep looking at it,” says Hirsch. “We’ve already heard from a couple of members that they did not have to submit a claim after the inspection process because there was no

Though the frequency of completed inspections may vary, some shop owners have expressed a concern for how the consumer is impacted.

“Now even the claims process can extend from what was a 20-minute call to a two- or three-day process,” says the Gulf Coast shop owner.

Likewise, Hirsch confirmed that in the case of USAA, Safelite officials are completing the “inspections” (and some have reported concerns that this may open the doors for steering).

The Solution?
So how does the industry respond to the ramifications that these practices sometimes create? Is legislation the answer?

State officials in Arizona think so. Last April, the state’s Gov. Jan Brewer signed a bill addressing several types of insurance fraud. Though not directly targeted at door-to-door sales companies, the law contains several provisions that spell out prohibitions against some of the reported activities these companies undertake, such as advising a customer that auto glass work will be paid entirely by his/her insurer unless the insurance coverage has been verified “by a person who is employed by or is a producer contracted with the policyholder’s insurer or is a third-party administrator contracted with the insurer.”

The law also prohibits companies from misstating the date when damage might have occurred on insurance claims and from misrepresenting the price of the repairs or replacement being billed to an insurer. The law further prohibits companies from saying that the insurer has approved the repairs “unless the auto glass repair or replacement facility has verified coverage or obtained authorization directly from the insurance company or any other third-party administrator contracted with the insurance company…”

The bill originally was introduced by Arizona State Rep. Nancy McLain, who said she did so “to try to get rid of some outright fraud that’s going on in the windshield repair business” and cited having been approached at car washes, etc., by auto glass companies. However, the law was not born without controversy (see box below).

Is the Arizona Fraud Law All It’s Cracked Up to Be?

Last year, Arizona legislators enacted a law focused on the auto glass industry that addressed several specific types of fraud. Arizona State Rep. Nancy McLain said she did so “to try to get rid of some outright fraud that’s going on in the windshield repair business” and cited having been approached at car washes, etc., by auto glass companies. But Fas-Break chief executive officer Kerry Soat, who worked with legislators in the final wording of the bill, questions whether the law was really needed.

“The lobbyists from the insurance companies were very adamant about the ‘rampant fraud’ that was going on inside the auto glass industry in Arizona,” says Soat. “They claimed there were more than 1,000 fraudulent claims in Arizona alone. When asked to produce these fraud claims they explained this was compiled over a 10-year period. A 10-year period, 1,000 fraudulent claims in Arizona—what does that really mean?”

Soat estimates approximately 10,000 auto glass claims are filed monthly in Arizona.

“This means the fraud rate in Arizona in the auto glass industry is, by the insurance companies’ own numbers, a whopping 0.0008 percent,” says Soat. “This isn’t only less than one percent, not even one-tenth of one percent, but less than one-thousanth of one percent each month—eight questionable claims per month.”

And the term “rampant fraud” that was used didn’t help any, Soat says.

“Fear is the greatest factor plugged into our society to gain favor for any subject,” he says. “All the legislators’ needed to hear was ‘rampant fraud’ and the bill was going to be signed. Of course, they really didn't want to hear from the auto glass industry, since they assumed we were the ones ‘perpetuating this rampant fraud.’”

Some wonder if regulation is the solution.

“Wow, what is the solution?” asked the Southeastern glass shop owner in response to the same question. “I really don’t know. The one thing I do know is that this model can’t be sustained.”

Penny Stacey is the editor of AGRR magazine.

The Sales Pitch
The parking lot sales pitch often starts with a simple introduction, according to information AGRR magazine has obtained that outlines one pitch being used in today’s market.

“Hey, sir/miss, how you doing? … My name is [blank] … They have us here doing a safety promotion for all [gas station name] customers.”

Salespeople are encouraged to “seem indifferent” and chat, before pointing out, “There are tons of people … getting damage to their windshields due to all the construction and road work going on. They just have us checking everyone out; making sure you guys are all driving safe.”

Once the representative looks over the windshield and develops his/her sales tactic, he/she is to say, “Hey, what happened to your windshield? You have a [insert one: bunch of chips, missing glass or a huge crack],” in this scenario.

Then the pitch outlines a number of questions with “yes” answers to be asked: “You do a lot of highway driving, right? Rocks hitting your windshield are annoying, right?”

Then, particularly in no-fault states, the customer often is advised that his insurance policy “entitles [him] to a brand-new windshield at no cost”—followed by a question: “Pretty cool, right?” (These representatives are advised never to use the term “free”—but rather the phrase “at no cost to you.”)

“I know all this may look like nothing now, but with the weather changing, it can crack out and be very dangerous for you,” continues the pitch.

The closing consists of asking for the customer’s insurance provider, making a joke about the provider’s slogan to keep the customer comfortable, and then pulling out a cell phone to make a call. (Representatives are all equipped with detailed lists of insurers, their phone numbers, open hours and important items to note when calling.)

“You have that policy card on you, right? It’s probably in your wallet or glove box,” advises the salesperson. “Great! Grab that for me real quick, and I will get the insurance company on the phone to make sure it’s no cost to you and get you out of here one-two-three.”

“You have that policy card on you, right?
It’s probably in your wallet or glove box.”
—sales pitch script

The sales representative goes on to prep the customer, advising that an insurance CSR will be reading a script and asking lots of questions—such as the date, whether anyone got hurt, and how large the damage is.

“They may try pushing for a repair,” advises the representative. “That’s when they drill into your windshield and fill it up with glass resin. It’s only a temporary fix, and a new windshield’s a safe windshield.”

Sales representatives also are trained to combat any possible objections to the service in this particular pitch. If consumers are concerned about rate increases, the salesperson is advised to say this won’t happen. For those who prefer to call their agents, the representatives are to offer to call for them. And, if a consumer says he is short on time, the representative is to advise that waiting could be dangerous, and that the installer’s schedule might fill up if the work isn’t booked quickly.

Employee contracts for at least one company’s independent sales reps (obtained by AGRR magazine) require that they never represent themselves as employees of the auto glass company, and that they never use the word “free.” ”The proper description to be used is “no cost to you,” reads this pitch.

Similarly, a different script obtained by AGRR, designed specifically for neighborhoods, begins by advising the customer that the person was helping some of the potential customer’s neighbors, and the installer will be in the area all week to complete work for all of them.

Then, the sales representative asks if the person has any glass damage, who his provider is, and if he has full coverage. Once damage is located, the script continues similarly to the gas station script, at the point which damage is found.

Inside One Auto Glass Company Using Direct Marketing Methods
While auto glass companies utilizing direct marketing methods exist under several names in several different markets, one of the best known is Coast to Coast Auto Glass (C2CAG), which is based in Scottsdale, Ariz., and, according to its website, also has operations in Florida, Kentucky, Minnesota, New York, Massachusetts and South Carolina. Not only is this auto glass company often discussed among readers, it also has made waves in press outlets across the nation in various ways.

As early as August 2009, an NBC News affiliate in Cape Coral, Fla., ran a report about an alleged windshield replacement scam taking place in local neighborhoods there. In the alleged scam, associates claiming to be with a company called Coast to Coast Insurance had been going to door to door in a neighborhood advising residents they needed their windshields replaced because they might not function properly in an accident.

While there is a Coast to Coast Insurance in Cape Coral, officials there denied involvement in the case. A C2CAG representative advised AGRR magazine she did not believe the case to be associated with her company, because the report noted that the door-to-door salespeople were collecting deductibles at the door.

“We do go door-to-door, but we do not collect money,” said C2CAG official Rhonda Jacobson at the time of the story.

Jacobson noted that C2CAG’s policy is to canvas an area and look for windshield damage.

“[Our independent contractors will] touch base with customers and then move on if there’s no windshield damage,” she said.

Jacobson added that if windshield damage is found, no funds are exchanged onsite.

“We do not collect payment of any kind at the door,” she said.

In October 2009, C2CAG was named in the case of Jenna Parslow—the Florida woman arrested for allegedly damaging the windshields of two vehicles and then offering to have the windshields repaired “at no cost.” The damage was alleged to have occurred in the parking lot of a pawn shop in Hernando County, Fla. The defendant had advised local police that she made $45 for every windshield she referred to the company, according to police reports. C2CAG spokesperson Jigna Patel advised AGRR magazine that Parslow was part of the company’s “independent, third-party sales force.”

“We utilize a third-party sales force on an independent contractor basis,”said Patel. “The individual involved in the Tampa, Fla., matter is a member of that independent, third-party sales force, and not an employee of Coast to Coast.”

“Coast to Coast has teamed up with a leading direct sales
distribution network that consists of independent authorized
sales distributors and providers local to each market in
which Coast to Coast operates.”
—C2CAG website

“Coast to Coast Auto Glass does not and will not tolerate unethical, fraudulent or illegal conduct by any of its sales representatives or other vendors,” added Patel. “This is against our company’s philosophy and core principles, and is contrary to the code of ethics that we require of any person providing sales services on our behalf.”

In another case, two men were arrested in Fort Myers, Fla., for going door-to-door “peddling” windshield replacements. The police report noted that the two worked for Tag Promotions, a local marketing company. One of the men, Edward Grano, told AGRR magazine shortly after the incident that he was booking work for C2CAG. Grano said that his main job was to book work for the company, but that he doesn’t actually do any repair or replacements.

“We book the jobs, but there are people who go get trained [to do the work],” he said.
Jacobson denied any ties between C2CAG and Tag Promotions.

“Tag Promotions does not work for Coast to Coast,” she said during an April 2010 interview.

In June 2010—shortly after the Tag incident—the Charleston, S.C., police issued a consumer advisory warning residents to beware of C2CAG representatives, advising they did not have the required “peddlers’ permits.”
Shortly after the advisory, Sgt. Trevor Shelor told AGRR magazine he’d written several tickets to C2CAG representatives and that he’d received questions from local residents about the company.

How Does the Company Work?
C2CAG conducts much of its work through marketing companies, according to information from a 2009 lawsuit in which the company was involved.

“All of Coast to Coast’s marketing is conducted through independent, unaffiliated third-party entities, who sell sales leads to Coast to Coast by directly contacting businesses, such as service stations and individuals, through neighborhood canvassing,” wrote Jeffrey Chebot of Whiteman, Banks and Chebot LLC, whose law firm represented the company in a suit filed by Belron US. The suit alleged that C2CAG and Eugene Casole, a former Belron US employee who went to work for C2CAG, had violated Casole’s employment agreement with Belron. The case eventually was resolved outside of court.

In October 2009, C2CAG announced that it had been purchased by TKB Marketing. The C2CAG website explains the company’s sales network as follows:

“Coast to Coast has teamed up with a leading direct sales distribution network that consists of independent authorized sales distributors and providers local to each market in which Coast to Coast operates,” it says. “This alliance allows Coast to Coast to reach customers face-to-face and offer its top-quality services directly to the customer. This unique direct, personalized marketing and sales approach (combined with our convenient, superior mobile installation and on-the-spot repair services) make Coast to Coast more than just a jingle on the radio, or an ad on TV. Authorized Coast to Coast sales representatives are your friends and neighbors that [sic] reside in the communities in which they serve.”

The Company’s Agents
C2CAG is a registered limited liability corporation organized in the state of Delaware and was incorporated in October 2008. C2CAG’s?website features a photo of Michael Shimada, chief financial operator. Kim Enger is listed as the company’s customer service representative, and Corey Udkoff as the company’s insurance company liaison. Jacobson handles public relations.

The company’s website is registered to Jimmy McPhillips, whose LinkedIn account lists him as national installation manager for the company.

TKB Marketing is referenced in the company’s corporate filings in Arizona, Connecticut and Florida. Shimada is referenced as the company’s manager and principle officer, respectively, in C2CAG’s Massachusetts and Kentucky corporate filings.

Patel, the company spokesperson to whom AGRR magazine often has been referred for comment on various items, also serves as corporate counsel for a company called Innovage, according to her LinkedIn account. Innovage is based in Foothill Ranch, Calif., where Shimada and TKB also are based, according to C2CAG’s various state filings. When seeking comment for this article, Patel advised AGRR magazine she handles C2CAG’s corporate structure, but is not involved in its day-to-day activities.

At press time, C2CAG had not responded affirmatively to repeated requests for comment for this story.

“[Our independent contractors will]
touch base with customers and then
move on if there’s no windshield damage.”
—Rhonda Jacobson , C2CAG

Penny Stacey is the editor of AGRR magazine.
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No reproduction of any type without expressed written permission.