Insurer Suncorp has seen a 70 per cent jump in so-called car-napping cases, where damaged vehicles are held for ransom until the owner pays exorbitant towing and smash repair bills.

The increase has prompted the company to call for tougher regulations to protect consumers, who can often be presented with complicated legal contracts on the side of the road after a crash.

Suncorp told the ABC it had seen a 69 per cent rise in car-napping cases in Victoria and a 60 per cent increase in New South Wales this year.

• Nationwide ‘lemon law’ edges closer
• The incredible stories behind car logos
• Another 800,000 VWs ‘show problems’

It claimed the practice was costing the industry tens of millions of dollars and pushing up the cost of insurance policies by $30 to $40 a year in those states.

Consumer Action Law Centre chief executive Gerard Brody described car-napping as when a network of tow truck companies and smash repairers charged exorbitant fees for repair work then hold the car ransom until the driver pays.

Many operators are also working with law firms who pursue the at-fault driver for costs.

“It’s been called car-napping colloquially because people are paying very large sums of money to these smash repairers to get their car back,” Mr Brody said.

Drivers unwittingly signing away their rights

Victoria Legal Services Commissioner Michael McGarvie raised concerns about the role some law firms were playing in the network.

Alyshia Clarke says she was shocked when she saw her bill. Photo: ABC

Thousands of drivers each year sign documents at a smash repairers or at the side of the road, with many not realising they have signed up for legal representation.

The ABC showed Mr McGarvie one of these documents, titled Motor Vehicle Claim Instructions.

But on the back of the page in small print is information giving a law firm irrevocable power of attorney and giving them power to pursue costs against the other driver.

Mr McGarvie said it was concerning.

“It appears this document is intended for signing without the signer ever having met the lawyer or a member of the law firm before signing over instructions to act. This should never occur,” he said.

It also appeared the driver who signed the form could be liable for a big legal bill, he said.

Car-nap victim ‘almost cried’ when shown $8000 bill

Alyshia Clarke, 21, had only held her licence for a month when she collided with another driver at a roundabout in May.

The swimming instructor only had third-party insurance and was hoping for an affordable quote when she drove her damaged car to a smash repairer.

The driver’s door had a large dent in the bottom corner.

Alyshia Clarke’s car was damaged in an accident in May 2015 and then ‘car-napped’. Photo: Alyshia Clarke/ABC

“He told me they had a special team of people who deal with this all the time … and they would fight on my behalf to try and recover my repairs through insurance,” she said.

Ms Clarke left her car with the smash repairer and did not receive a quote on the day.

Months later she was presented with a bill of nearly $8000. She had bought her 2002 model Volkswagen Golf for $3700.

“I almost cried,” she said. “I couldn’t understand why that figure had come along and why I hadn’t been told about it beforehand.”

Ms Clarke had also signed a form at the smash repairers that gave a law firm authority to act on her behalf. She said she had no idea what she had signed up for.

After seeking help from the Consumer Action Law Centre, Ms Clarke reached a $1500 settlement with the smash repairer.

It took nearly five months to get her car back.

The Consumer Action Law Centre and Suncorp have both made submissions for greater consumer protection in regulating the tow truck industry and the relationships with smash repairers and law firms.

Victoria’s Essential Services Commission and New South Wales Independent Pricing and Regulatory Tribunal are both preparing reports on the issue.

-ABC