Lauren Farrugia is a Litigation Clerk at Washington Legal Foundation and is a Juris Doctor candidate at the George Washington University School of Law.
Each year, thousands of unsuspecting drivers fall victim to a criminal enterprise they never see coming—staged auto accidents. This scam, carried out by organized criminal rings, costs $20 billion a year in fraudulent claims. It’s a comprehensive grift involving false insurance claims, faked injuries, inflated medical billing, and colluding body shops. Beyond the debilitating financial toll, these schemes jeopardize public safety, inflate insurance premiums, and clog the judicial system with fraudulent litigation. Traditional law enforcement has struggled to keep up with ever evolving tactics. To stop them, legal and policy responses must become just as strategic and coordinated as the schemes themselves.
How the Scam Works
Staged auto accident fraud is rarely the work of a single individual. The convoluted scheme involves multiple players with very specific roles. One strategy is called the “swoop and squat,” in which one car suddenly cuts off a target vehicle while an accomplice blocks them from switching lanes. Another is called the “panic stop,” where one driver slams on the brakes in front of a distracted victim. The crash itself is just the beginning. Fake passengers feign injury, corrupt doctors conjure up bills for unnecessary treatments, and complicit body shops inflate repair costs. The goal? An avalanche of fraudulent insurance payouts. And while the perpetrators cheat the system for benefit, everyday drivers end up being robbed through rising premiums.
Early Enforcement Combating Auto Fraud Prevention
Auto-related fraud isn’t new, and governments have tried to stem the bleeding. States like New York and California were among the first to create specialized Fraud Divisions in the early 2000s, leveraging advanced investigative techniques, and strong collaboration with insurers to pursue staged accident rings aggressively. In the early 2000s, however, Florida became a hotspot, and a major collaborative investigation called Operation Sledgehammer (2011-2013) was born. During this operation, the FBI and state and local law enforcement worked together to dismantle these complex criminal enterprises. As a result, 92 defendants have been charged for their role in the scheme, including a chiropractor, underscoring the diverse range of participants in these fraudulent schemes.
The Impact of Operation Sledgehammer
Operation Sledgehammer was a landmark in the fight against staged auto accident fraud. The arrests demonstrated that these fraud rings operate as sophisticated enterprises rather than isolated incidents. Yet, despite its success, Operation Sledgehammer also demonstrated the challenge for law enforcement: fraudsters continually adapt, and fragmented jurisdictional boundaries often hinder seamless investigation and prosecution. There is a critical need for ongoing multi-agency collaboration, enhanced data-sharing among insurers and law enforcement, and an updated legal framework to keep pace with evolving tactics.
Emerging Enforcement and Legislative Efforts
State governments are increasing enforcement efforts and implementing targeted reforms to combat staged auto accident fraud. In New York alone the cost in scam-related premium increases for all drivers comes to an extra $100-$300 a year. In response, state legislators have introduced bills like A.3851/S.5232, which would criminalize orchestrating staged collisions and give insurers power to cancel fraudulent policies. Additionally, New York City launched “Operation Bright Eyes” in 2025. The government outfitted 500 city taxis with interior and exterior surveillance cameras, free for drivers for the first year, to deter staged crash fraud and scams tied to insurance claims.
Meanwhile in February this year, Michigan expanded its Auto Insurance Fraud Unit into a broader Auto Fraud Task Force, tackling both staged crash fraud and escalating auto theft.
At the federal level, in April 2025, Representative Mike Collins (GA) introduced the Staged Accident Fraud Prevention Act. This bill would federally prohibit intentionally staging a crash with a commercial vehicle and empower the Department of Justice to establish a specialized task force to prosecute sophisticated crash schemes.
To effectively dismantle staged crash rings, however, legal and policy frameworks must evolve alongside the increasingly sophisticated tactics. Legislators can advance efforts by creating shared data platforms for insurers, law enforcement, and regulators to detect fraud rings using analytics and AI. States strengthening criminal penalties and reclassifying participation in staged accidents could also act as a deterrent. Finally, public education campaigns that teach consumers how to recognize common scam tactics are critical in empowering drivers to protect themselves and report fraud. Taken together, these initiatives offer a multi-pronged strategy to disrupt organized fraud and protect honest policyholders across the country.