Winston Tire Agrees to $1.4-Million Settlement in Vehicle Repair Case : Consumers: Charges stemmed from undercover investigation. Company does not admit any wrongdoing.
Winston Tire Corp., among the largest independent tire dealers in California, agreed Monday to pay $1.4 million in fines and restitution, settling charges that it sold customers unneeded parts and service statewide and in some cases billed them for work not performed.
In addition, Winston accepted what amounts to a one-day suspension of its repair license, agreeing to close repair bays at all 163 dealerships this Sunday. The company also agreed to a three-year probation, during which its repair facilities will be monitored by the state Department of Consumer Affairs.
Under the agreement, 20,000 Winston Tire customers who purchased specified parts on the advice of a Winston employee between July 1, 1992, and June 30, 1993, will split $450,000 in restitution. Eligible customers will receive $10 for each pair of shock absorbers, $20 for each pair of coil springs and $50 for each pair of brake calipers. The Burbank-based tire dealer said those customers will be mailed checks within 45 days.
In reaching the settlement, Winston Tire did not admit any wrongdoing. The company said it was following long-held industry practices for replacing brake components and suspension parts. However, the company said it is adopting new policies.
The settlement stems from a 13-month undercover investigation of repair practices at 37 Winston dealerships around the state. The Department of Consumer Affairs said undercover agents from its Bureau of Automotive Repair took cars in top condition to Winston Tire for mechanical inspections and were overcharged an average of $125.21 for unnecessary parts and service.
In Los Angeles County, undercover agents were overcharged for parts at Winston Tire stores in El Monte, Culver City, Hollywood, Lancaster, Lawndale, Long Beach, Newhall, Northridge and Tarzana. Other Southern California stores where agents were overcharged are located in Camarillo in Ventura County, Garden Grove in Orange County and San Diego.
The settlement covers not only charges from the state department, but charges brought by district attorneys in Sacramento and Ventura counties, which conducted concurrent investigations.
Considering the company’s size, the penalty against Winston Tire is more significant than the one levied against Sears, Roebuck & Co. last year for similar charges. Sears, with $3 billion in annual automotive sales nationwide, agreed to pay $8 million and distribute merchandise coupons to settle charges that it sold California customers unneeded parts and service. Although placed on probation, Sears was not required to close down for a day.
Investigators said Winston Tire, with estimated annual revenue of $150 million, was hit with a stiffer penalty because the company had been accused of overselling twice before--in 1982 in Sacramento County and in 1988 in Ventura County. Winston was under two separate injunctions against overselling as a result of those previous investigations.
“They had done this before. That was a big factor in setting the penalty,” said Liz O’Brien, deputy district attorney in Sacramento County.
To soften the blow, Winston was given two years to pay the penalties.
Responding to the charges, representatives of Winston Tire pledged reforms to prevent improper selling. The company said it is establishing a toll-free line for customer complaints and inquiries, and is creating its own “secret shopper” program to ensure that repair work is proper. Winston also said that under a new “parts retention” program, inspectors will examine parts removed from customers’ vehicles.
In a statement, Sam Winston, chairman and co-founder of the privately held firm, said he was “totally unaware . . . of alleged incidents until informed by the bureau (of automotive repair).” He said that he was determined to “ensure that nothing like this could happen in the future.”
The company said that its internal audits did not detect overselling and that only 150 of its 1.5 million customers complained last year about service. There was no pattern to the complaints, the company said.
However, state investigators maintain that customers rarely complain about overselling because they lack knowledge of auto mechanics and have no way of knowing they didn’t need specific repairs.
Under the terms of the settlement, Sacramento and Ventura counties will receive $350,000 each for civil penalties and investigative costs, and the state will receive $250,000 to cover investigative costs.
Customers who think they are entitled to restitution but do not receive a check by Dec. 10 can call the Bureau of Automotive Repair at (800) 952-5210.
