Consumer Alert: Insurance fraud costs all of us - KTIV News 4 Sioux City IA: News, Weather and Sports

Consumer Alert: Insurance fraud costs all of us

Frenchitt Collins used TV ads to lure poeple into his insurance scams. Frenchitt Collins used TV ads to lure poeple into his insurance scams.

Insurance fraud is big business and we're all paying for it. It's easy to pull off and it's unlikely to result in any punishment.

One man used a seemingly legitimate business to commit insurance fraud for thousands of dollars.

A television commercial asks, "Who do you call?" It then goes on to encourage customers to call "Big Brother."

Big Brother's real name is Frenchitt Collins. For years Collins worked as a legitimate insurance adjustor trying to attract clients with those television ads.

"He got an institutional understanding of how the chiropractic business worked," says Jan Bodon, a U.S. Postal Inspector. "Once he felt knowledgeable enough he filed fraudulent claims with numerous insurance companies."

Collins set up a bogus chiropractors' office using P.O. Boxes and turned to friends and family to get the scheme started.

"He would go ahead and offer them $100 or $200 in order to be able to use their identifiers," says Bodon. "Once he had that information he would go ahead and complete the medical forms necessary and send them to the insurance companies."

Insurance companies would then send checks and lots of them.

"Those PO Boxes were rented by Collins, his wife, his brothers, or his girlfriends," says Bodon.

The goal of these ads was to lure in more victims.

"That added legitimacy to his scheme," says Bodon. "Victims went and actually dialed his number, provided the identifiers, and he went ahead and submitted the fraudulent claims."

Federal officials say insurance fraud is a $30 billion business in the U.S.

"It is very lucrative for the criminal to perpetrate the crime because it's low risk and it's high reward and they know that," says Fred Lohmann with the National Insurance Crime Bureau.

Experts say this abuse is costing all of us.

"The fact that this crime is occurring and is so prevalent in the U.S. it taxes resources federal, state, and local that have to actually go in and investigate the crimes," says Lohmann.

Collins was sentenced to 15 years in prison and ordered to pay more than $700,000 in restitution to his victims. Losses in these types of scams are passed on to all consumers who buy insurance.

One way to avoid unwittingly becoming part of one of these insurance scams is to not give out your social security number unless you are sure you are dealing with someone legitimate.

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