Court prohibits vehicle protection associations from selling insurance | Minas Gerais

Court prohibits vehicle protection associations from selling insurance | Minas Gerais
Court prohibits vehicle protection associations from selling insurance | Minas Gerais
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1 of 2 Federal police officers seized documents during the operation — Photo: Federal Police/Disclosure
Federal police seized documents during the operation — Photo: Federal Police/Disclosure

Four vehicle protection associations are prohibited from selling any type of insurance. The decision is from the Federal Court and is valid throughout the country.

The 3rd Panel of the Federal Regional Court of the 6th Region, in Minas Gerais, unanimously determined that the activities of these associations in the market were illicit.

The decision pointed out that the products offered were not authorized of the Private Insurance Superintendency (Susep).

Associations can pay a fine if they fail to comply with court orders.

According to the Federal Police, the objective of the operation was to dismantle companies that illegally exploit the insurance market under the incorrect name of vehicle protection associations. The associative model does not allow the sale of insurance, according to Brazilian law.

The association, the target of this Tuesday’s operation, is one of the largest in Brazil, illegally selling insurance in all states. It is estimated that, a real company run by a couple from Belo Horizonte, has more than 100 thousand customers and around 500 employees.

The PF reported that it was proven that several customers of this company, improperly called “associates”, did not receive compensation when vehicle accidents occurred.

The “association” has hundreds of complaints on Procon and on consumer complaints websites.

Among the main complaints are:

  • Failure to pay compensation for total loss;
  • The poor quality of accredited workshops;
  • Failure to use the towing service;
  • Non-coverage on third-party vehicles, among others.

The owners of the illegal insurance “association” set up a money laundering scheme to direct part of the apportionment amounts paid by “associates” to themselves.

According to investigations, this crime has been copied and replicated by all these associations that sell fake insurance, causing part of the money paid by customers to go into the pockets of the “association” owners.

2 of 2 Motorcycle was seized during the 3rd phase of ‘Operation Fake Insurance’ — Photo: Federal Police/Disclosure
Motorcycle was seized during the 3rd phase of ‘Operation Fake Insurance’ — Photo: Federal Police/Disclosure

The PF estimates that the company’s revenue is more than R$500 million per annum. As an “association” cannot distribute profits to directors, the owners of this vehicle protection company formed several other companies around the main one.

The association’s money was passed on to these companies as a form of payment for services such as 24-hour assistance, towing, trackers, workshops, among others. The way of concealing distribution of profits is, in the view of the Federal Police, an indication of money laundering.

The directors of the “association”, who founded it and planned the money laundering scheme, They have a luxurious life, with properties, cars and international travel.

According to the PF, they boast a high standard of living, including on social media. Currently, the couple who founded and preside over the company live in Florida, in the United States. The police are in contact with North American authorities to identify the whereabouts of the two.

The directors and “oranges” in the surrounding companies were indicted for the crimes of money laundering, ideological falsehood, crimes against consumer relations and for operating a financial institution without state authorization. Cumulative sentences can exceed 20 years in prison.

Federal Police carries out operation against vehicle protection association

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The article is in Portuguese

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