State to Seek to Lift Auto Repair License of Sears : Consumers: Undercover agents report that retailer’s shops systematically charged for unneeded work.
The state Department of Consumer Affairs today will seek revocation of Sears, Roebuck & Co.’s license to perform automobile repairs in California, charging the nation’s second-largest retailing chain with systematically bilking consumers, state officials said Wednesday.
The move could put Sears out of the auto repair business in California, where it runs 70 automotive repair centers and is the largest single operator of auto shops. Nationwide, Sears auto service and parts sales are estimated at more than $3 billion a year.
The department said the action results from an 18-month undercover investigation--the largest ever by the agency--into repair practices at 33 Sears automotive centers throughout the state. The department said undercover agents took cars in top condition to Sears for mechanical inspections and were overcharged an average of $223 for repairs.
Besides making unnecessary repairs, Sears mechanics also charged some undercover agents for work that was never performed, the department said. In a few cases, Sears mechanics damaged cars; one undercover auto that went in for a brake inspection left Sears without brakes, the department said.
State Consumer Affairs Director Jim Conran said in an interview with The Times that the investigation revealed a “constant pattern of abuse” that he linked to intense corporate pressure on auto mechanics to sell certain parts. Conran said automotive department employees were required by regional managers to meet strict quotas on the replacement of shocks, springs and brake components.
“These are not honest mistakes,” Conran said, referring to the findings of the investigation. “This is the systematic looting of the public.”
Conran said he believes aggressive sales tactics are taking place in other states supervised by Sears regional offices in Phoenix, which manages Southern California, and Seattle, which oversees Northern California. “I doubt the problem stops at the California border,” Conran said.
Reached at Sears headquarters in Chicago on Wednesday, spokesman Gordon Jones said the company would have no comment until after the charges are filed today.
Separately, several Sears automotive centers are under investigation by the Contra Costa County district attorney’s office. Deputy Dist. Atty. James Sepulveda would not disclose details of his investigation, but confirmed that settlement discussions with Sears are under way.
These investigations do not affect Sears’ other retail operations. Conran said that Sears department stores are not under investigation.
The Consumer Affairs Department said that during the first phase of its investigation, conducted last year, mechanics at 27 Sears auto centers performed costly and unnecessary repairs. The overcharges occurred in 35 of 38 tests.
Eleven of the stores where overcharges occurred are Southern California outlets, in Covina, Canoga Park, Brea, San Bernardino, Glendale, Palmdale, Santa Monica, Northridge, City of Industry, Indio and a Los Angeles shop on Olympic Boulevard. Agents took a car to a shop in Costa Mesa but were not overcharged there.
Most of the cars were sent to Sears with worn brake pads, but no other mechanical problems. Nonetheless, the department alleges, Sears consistently sold easy-to-replace steering components, brake components, shocks and springs to the undercover agents. In one case, Sears replaced a set of rear springs that had only 18 miles on them.
The department said undercover agents were bilked regardless of sex, age or ethnicity. Investigators said certain General Motors vehicles were likely targets because they were especially easy to work on.
Allen D. Wood, who headed the investigation, said, for example, that Sears mechanics tended to replace idler arms, a steering component, on GM Astrovans.
“You ask why? It’s twice as much profit,” said Wood. Astrovans have two idler arms, while most other vehicles have one.
Although the department has taken action in the past against small auto repair shops and individual outlets of major chains, this is the first time it has targeted the statewide operations of a company.
The case against Sears also is unusual because the department is seeking revocation of licenses held by all of Sears’ 70 automotive centers, even though the investigation involved fewer than half of them. Derry Knight, deputy director of legal affairs for the Consumer Affairs Department, acknowledged that the legal strategy was untested, but said that evidence gathered from Sears informants and other sources indicates that the overselling went on throughout California.
In addition, officials said it would have been too costly to check each Sears location. The cost of the investigation is estimated at $300,000 to $500,000, including purchase of the 18 late-model cars used in the probe. State law does not permit the department to recover the cost of the investigation.
Among the findings:
* An undercover agent took a 1985 Chevrolet Caprice station wagon with worn brake pads to a Sears in City of Industry for a free inspection. The agent ended up paying $455.72 for complete replacement of front brakes and four coil springs.
* A 1978 Ford Thunderbird with worn front brake pads and a low brake pedal was taken to a Sears in Northridge for a brake inspection and safety check. Sears ended up charging $500.23 for new front brakes, shock absorbers, front springs and a lifetime warranty on the new parts.
* Estimated repairs on a 1984 Oldsmobile Cutlass taken to a Sears in Santa Monica with worn brake pads came to $671.93 for new front brakes, a brake rotor, front and rear shocks, four tires, an oil change and an air filter. The tab was revised to $372.26 after the undercover agent refused the tires, oil change and air filter.
The department said it did not know how many consumers might have been victimized by Sears. The department does not track auto sales, and the company does not publicly report sales in its automotive division.
The department informed Sears of the investigation in January. Since then, investigators said, Sears’ selling tactics have improved.
In the smaller, second phase of the investigation, conducted in March, seven of 10 undercover autos--a smaller percentage--received unnecessary repairs. The average overpayment had dropped to $100, mostly for unneeded brake components.
Wood, the department’s lead investigator, said Sears’ performance is not satisfactory. “We are not convinced that they’ve totally changed their ways,” he said.
According to an automotive salesman at one Los Angeles County Sears store, employees were recently told to soften their sales pitches. Employees were told to refrain from telling customers they “need” certain repairs; employees were instructed to “recommend” repair work. It is not known whether these directives were issued at other Sears stores.
The department’s investigation was triggered by a 50% rise in consumer complaints against Sears over the last three years. The department said that the jump in complaints coincided with Sears’ decision to slash hourly wages of automotive employees and pay them commissions.
Investigators said that compensation depended on whether employees met sales quotas. At one Sears store, according to investigators, employees were told to sell five front-end alignments, eight sets of springs, eight sets of shock absorbers and two tires each day. Employees who did not meet quotas faced undesirable work schedules, transfers to lower-paying positions or dismissal, investigators said.
Conran said he found the results of the department’s investigation shocking. “People go to Sears because they feel they will get good service. They believe it is a company you can depend on. Unfortunately, that is not the case.”
Conran said that the Sears inquiry was part of a continuing probe of the auto repair industry, one of the leading subjects of complaints to the department.
The Department of Consumer Affairs licenses auto repair shops and investigates consumer complaints. It revokes an average of 50 licenses a year for serious infractions of state consumer protection laws.
A revocation proceeding takes place before the state Office of Administrative Hearings, and in the case of Sears is expected to last a minimum of six months. It is similar to a trial in that both sides may call witnesses and provide evidence. It proceeds more quickly than a trial because few pretrial discovery motions are allowed.
The administrative law judge may recommend revocation or suspension of Sears’ license, place the retailer on probation or leave its license intact, but the Department of Consumer Affairs makes the final decision. If the department rules against Sears, the retailer may file an appeal in Superior Court. As the accuser, the department has no right to appeal. It is rare for the department to lose a revocation case.
Licenses for 10 Sears repair shops will expire on June 30, while the revocation proceedings are expected to be under way. A spokesman for the department said Sears will probably be permitted to renew those licenses while the hearings continue.
Avoiding Car Repair Rip-Offs
The state Department of Consumer Affairs recommends that consumers take the following steps when having automobiles repaired:
* Get written estimates from at least two repair shops so that you can compare diagnosis and prices.
* Ask questions about why the repairs are necessary. Why does the part need to be replaced? What will happen if it is not? How long should the part last?
* Ask what specific jobs entail so there are no surprises. If you are getting a “brake job,” for example, find out how many parts are being replaced and why. If you are told the work has a “lifetime guarantee,” make sure you are not being charged for an extended warranty.
* Before you authorize the work, tell the mechanic you want replacement parts returned. State law requires the servicer to give you the used parts if you request them in advance. Remember that even if a part looks worn or discolored, it may be fine.
