COLUMBIA — State senators are moving to crack down on counterfeit air bag units — some filled with garbage bags and plastic foam — that have found their way into vehicles in Charleston and across the country.
Thousands of unsuspecting and usually lower-income motorists who have had an air bag deploy may go to an unscrupulous repair shop to reorder and get an new bag installed. What they don’t know is that some shop owners order an air bag from the automaker or original equipment manufacturer just to submit an insurance claim. Meanwhile, they get a faulty air bag unit, typically manufactured in China and purchased on eBay.
“They’ll install the counterfeit air bag which they’re getting for $20 or $30, return the (real) air bag, then pocket the money, so it’s really insurance fraud,” Craig Orlan, a state government relations analyst with Honda North America, said during a hearing Wednesday. In many cases, faulty air bags were discovered during the widespread recall of more than 5.5 million Takata air bags.
“In the Charleston area, through the Takata recall, we pulled out some air bags and when we pulled it, there is a trash bag in it,” Orlan added. “We’ve pulled out hundreds of these across the country and are replacing them while realizing the problem is much more widespread than we previously thought.”
The bill under debate would make it a felony for a person who knowingly or intentionally imports, manufactures, sells or installs counterfeit air bags, with penalties including jail time of up to five years and fines up to $5,000.
A Senate judiciary subcommittee Wednesday approved minor changes to the bill suggested by the automotive industry to ensure it also included additional air bag components. Language by Sen. Gerald Malloy, D-Hartsville, that would include a tier system for penalties and safeguard wording so that low-level repairmen don’t get hit with felonies when their bosses are guilty is pending.
“We can assign criminal penalties all we want, but it’s not going to end up hitting the company,” Malloy said. “I don’t see how you parse it to get the individuals that are the problem without having the scapegoats of these installers.”
Malloy disclosed during the hearing that his sister is an executive with Takata and that she will be his “expert when the time comes.”
Under federal trademark law, officials are limited to prosecuting counterfeiters only when fake logos are attached to air bags. Orlan said a majority of legitimate air bags, including passenger and side-impact air bags, do not contain trademarks, thus creating a loophole for fakes. Counterfeiters are increasingly aware of the loophole and adapting so that when raids occur, authorities can’t even confiscate the fake air bags in some situations.
“We want to give the federal authorities the ability to confiscate these air bags,” Orlan said. Similar legislation has passed in 11 other states and a House-approved bill is currently in the North Carolina Senate.
The Tar Heel State nabbed Igor Borodin, of Indian Trail, N.C., for importing counterfeit air bags and selling an estimated 7,000 of them on eBay. He was sentenced in 2013 to seven years in prison. He was required to pay restitution to 118 victims and authorities seized more than 1,600 counterfeit air bags.