Penal Code 551 PC – Unlawful Referral to an Auto Repair Dealer

Updated August 23, 2020

Penal Code 551 PC is the California statute that prohibits the unlawful referral to an auto repair dealer. This offense can be prosecuted as a misdemeanor or a felony, and carries a maximum sentence of up to 3 years in jail or prison.

Examples

• Mike owns a car repair shop and offers an insurance agent $200 for every car owner he refers to his business.
• Doug owns an auto body shop and tells a customer that he will pay his insurance deductible if the customer gets work done at the shop.
• Santiago works at an automotive repair shop and tells an insurance adjuster he will pay him $50 for every car repair project he brings to the business.

There are several legal defenses that a person can raise. These include showing that an accused party:

• gave a gift to an adjuster and not a payment;
• acted without knowledge; and/or,
• was entrapped.

Penalties

If the amount at issue is greater than $950, the offense is a wobbler offense. This means it can be charged as either a misdemeanor or a felony.

If the amount at issue is less than $950, the offense is charged as a misdemeanor.

As either a misdemeanor or a felony, this crime is punishable by:

• imprisonment in the county jail; and/or,
• a significant fine.

Our California criminal defense attorneys will highlight the following in this article:

• 1. When is it illegal to make a referral to an auto repair dealer?
• 2. What are the common defenses to a Penal Code 551 PC charge?
  • 2.1 Gift
  • 2.2 No knowledge
  • 2.3 Entrapment
• 3. What is the potential jail time?
• 4. Are there related crimes a person could be charged with?
  • 4.1 Commercial bribery – PC 641.3
  • 4.2 Auto insurance fraud – PC 548-551
  • 4.3 False report of vehicle theft – VC 10501

1. When is it illegal to make a referral to an auto repair dealer?

Penal Code 551 is the California statute that makes it a crime for an auto repair dealer (or any of its employees) to:

1. offer an insurance agent a fee or commission for referring an insured to the dealer for vehicle repairs covered under an insurance policy; or,
2. knowingly offer a potential customer a discount to offset a deductible on the customer’s insurance policy.¹

2. What are the common defenses to a Penal Code 551 PC charge?

A person can challenge the accusation by raising a legal defense.

Three common defenses are:

1. gift
2. no knowledge; and/or,
3. entrapment.

2.1. Gift

The law only prohibits a repair dealer from offering a fee or a commission for a referral. It is not a crime, for example, if a dealer gives a one-time gift to an agent (for some reasonable grounds – as in a holiday gift).

2.2. No knowledge

With regards to offsetting a deductible, please recall that a defendant is only guilty under this statute if he knowingly offers a discount to work as an offset. An accused, therefore, cannot be guilty of a crime if he did not know he was offering a discount to serve as an offset.

2.3. Entrapment

In many PC 551 cases, suspects are often arrested and accused after an undercover sting operation. Sometimes in these operations, an officer lures a person into committing a crime. This luring is entrapment and it is an acceptable legal defense provided that the accused shows he only committed the crime because of the entrapment.

3. What is the potential jail time?

If the amount at issue is greater than $950, a violation of PC 551 is a wobbler offense. This means it can be charged as either a misdemeanor or a felony. A possible sentence could include:

• imprisonment in the county jail for up to three years; and/or,
• a maximum fine of $10,000.²

If the amount at issue is less than $950, a PC 551 violation is charged as a misdemeanor. The crime is punishable by:

• imprisonment in the county jail for up to six months; and/or,
• a maximum fine of $1,000.³

4. Are there related crimes a person could be charged with?

There are three crimes related to the unlawful referral to an auto repair dealer. These are:

1. commercial bribery – PC 641.3;
2. auto insurance fraud – PC 548, PC 549, PC 550; and,
3. false report of vehicle theft – PC 10501.

4.1. Commercial bribery – PC 641.3

Commercial bribery is a crime per Penal Code 641.3.

Commercial bribery is essentially when a person commits the crime of bribery in a business setting.⁴

The penalty for commercial bribery depends on the amount of the bribe. It can be either a misdemeanor or a felony and can include a sentence of:

• a maximum jail term of three years; and/or,
• a substantial fine.⁵

4.2. Auto insurance fraud – PC 548-551

Auto insurance fraud is a crime under California law in Penal Code 548-551.

Automobile insurance fraud refers to any incidence of California criminal fraud that involves car insurance.⁶

Most forms of auto insurance fraud are charged as felonies. The penalties can include:

• imprisonment for up to five years; and/or,
• a $50,000 fine.⁷

4.3. False report of vehicle theft – PC 10501

Per Penal Code 10501 PC it is a crime for a person to make a false report of vehicle theft.

For a first offense, making a false report of auto theft is a misdemeanor in California law.⁸

The potential penalties for falsely reporting a vehicle theft are:

• misdemeanor (summary) probation;
• up to six months in county jail; and/or,
• a fine of up to $1,000.⁹

For additional guidance…

If you or someone you know has been accused of a crime under Penal Code 551 PC, we invite you to contact us for a free consultation. We can be reached 24/7.

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