California Penal Code 551 PC prohibits unlawful referrals to an auto repair dealer. This offense can be prosecuted as either 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?
- 3. What is the potential jail time?
- 4. Are there related crimes a person could be charged with?

Penal Code 551 is the California statute that prohibits the unlawful referral to an auto repair dealer.
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:
- offer an insurance agent a fee or commission for referring an insured to the dealer for vehicle repairs covered under an insurance policy; or,
- 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:
- gift
- no knowledge; and/or,
- 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.

A violation of this law can result in a fine and/or jail time.
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:
- commercial bribery – PC 641.3;
- auto insurance fraud – PC 548, PC 549, PC 550; and,
- 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…

Contact us for help with your case.
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.
Legal References:
- California Penal Code 551 PC. This code section states: “(a) It is unlawful for any automotive repair dealer, contractor, or employees or agents thereof to offer to any insurance agent, broker, or adjuster any fee, commission, profit sharing, or other form of direct or indirect consideration for referring an insured to an automotive repair dealer or its employees or agents for vehicle repairs covered under a policyholder’s automobile physical damage or automobile collision coverage, or to a contractor or its employees or agents for repairs to or replacement of a structure covered by a residential or commercial insurance policy. (b) Except in cases in which the amount of the repair or replacement claim has been determined by the insurer and the repair or replacement services are performed in accordance with that determination or in accordance with provided estimates that are accepted by the insurer, it is unlawful for any automotive repair dealer, contractor, or employees or agents thereof to knowingly offer or give any discount intended to offset a deductible required by a policy of insurance covering repairs to or replacement of a motor vehicle or residential or commercial structure. This subdivision does not prohibit an advertisement for repair or replacement services at a discount as long as the amount of the repair or replacement claim has been determined by the insurer and the repair or replacement services are performed in accordance with that determination or in accordance with provided estimates that are accepted by the insurer.”
- California Penal Code 551(c) PC.
- See same.
- California Penal Code 641.3 PC.
- See same.
- California Penal Code 548-551 PC.
- See same.
- California Vehicle Code 40000.9 VC.
- California Penal Code 19 PC.