Auto Repair Secrets
When undercover cars in California
and New Jersey caught Sears Auto Centers selling unnecessary repairs in
1992, many people were surprised to learn that the company had quotas,
sales commissions, and contests that encouraged the sale of additional
repairs. Consumer advocates said those practices were responsible for the
problems at Sears, but the company initially denied that anything improper
had occurred. Sears claimed that replacing good parts before they fail was
"a common practice in the industry" and tried to pass it off as
preventive maintenance. The company later admitted that "mistakes did
occur" and agreed to pay $8 million to settle the California charges.
Sears also agreed to make restitution to 900,000 customers nationwide and
they discontinued the use of quotas, commissions, and contests.
At the time, the shocking truth of Sears'
words went largely unnoticed. But the industry's "dirty little
secret" was out: Quotas, commissions and contests (for example,
Caribbean cruises and $10,000 cash prizes for managers, $500 per day
quotas for mechanics), plus the replacement of good parts, really were
common practices at many large, well-known auto repair chains. A number of
undercover investigations and class-action lawsuits have resulted in
charges of deceptive advertising, bait & switch tactics, and outright
fraud at some of the biggest names in the business.
Chain Stores Caught
(Again) in KCBS Sting
May, 1999: Exactly one year after
their ground-breaking auto repair investigation, KCBS-TV conducted more
undercover runs at repair shops in the greater Los Angeles area. According
to the KCBS I-Team, shops from Pep Boys, Goodyear, Tuneupmasters and
Purrfect Auto recommended and/or sold repairs that were not necessary.
Chain Stores Caught in
May, 1998: A three-month hidden
camera investigation by KCBS-TV in Los Angeles caught dozens of big-name
chain stores recommending and/or performing unnecessary repairs.
Undercover runs at 90 repair shops in five counties found over 40% of the
chain stores trying to sell services or repairs that were not needed. In
some cases, shops charged the undercover reporters for services that were
never done. According to the KCBS investigative team, shops from the
following chains were caught trying to rip off their reporters (the
numbers represent the percentage of visits to that chain that involved
attempted rip-offs): Midas Muffler & Brake Shops (40%), Montgomery
Ward Auto Express (60%), Econo Lube N' Tune (40%), Purrfect Auto Service
(60%), and Tuneup Masters (80%).
Midas Muffler &
Brake Shops Busted
April, 1997: California's Bureau of
Automotive Repair announced its conclusion of an undercover investigation
targeting three Midas Muffler & Brake Shops in Burbank, N. Hollywood,
and Panorama City. According to the Bureau, ten undercover runs confirmed
the sale of unnecessary parts or services. The shops were suspended
(closed) for ten days, placed on three years' probation, and fined
$15,000. This recent bust brings the California total to 24 Midas shops
that have been charged with fraudulent business practices after undercover
investigations were done. They paid total fines in excess of $500,000. In
Pennsylvania, undercover investigations have resulted in similar charges
against 17 Midas shops.
Econo Lube N' Tune
Busted, Fined $284,000
December, 1995: California's Bureau
of Automotive Repair announced its conclusion of an undercover
investigation targeting Econo Lube N' Tune, Inc. The company was accused
of selling unnecessary repairs and charging for parts that were never
installed at its company-owned stores. A local district attorney got an
injunction ordering Econo Lube to change its practices at the 14
company-owned stores in California. The company agreed to the settlement
and fine without admitting any wrongdoing. Econo Lube N' Tune operates
over 200 shops in ten states (mostly franchises), and they have
continually advertised low-priced services and repairs. Since 1990, a
total of 41 Econo Lube shops have been caught selling unnecessary repairs
during undercover investigations in California.
Since 1996, California's Bureau of
Automotive Repair has caught 15 Purrfect Auto Service shops selling
unnecessary repairs during undercover investigations. Ten of the shops had
their state licenses permanently revoked. Purrfect Auto is a chain of
about 100 shops (mostly franchises) located in Arizona, Nevada, and
California. Their practices are similar to those of Econo Lube N' Tune
(see the above story), with a heavy emphasis on low-priced ads for oil
changes, tune-ups, brakes, smog inspections, and other services.
vs. Goodyear & KMart Auto Centers
Class-action lawsuits have been
filed against KMart and Goodyear Auto Centers over accusations of selling
unnecessary parts and services in their company-owned repair shops.
(Goodyear was sued in October of 1994 following investigations in
Minnesota and Illinois; a settlement was reached in 1997.) The alleged
sales of unnecessary repairs were blamed on the companies' use of
commissions, contests, and/or quotas that encouraged employees to sell
additional parts and services. As in the previous stories, customers were
attracted by their heavily advertised low prices. After the KMart lawsuit
was filed, the company sold its auto centers to Roger Penske. Penske took
over in November of 1995 after announcing that he would retain most of the
"Low, Low Prices"
If it sounds too good to be true, it probably is.
Low-priced ads for auto repairs and
services are almost always "loss leaders," i.e., there's
little-or-no profit in a particular service at the advertised price. So
why do companies run those ads? To get more people into their shops so
employees can sell them additional repairs or services that aren't on
sale. In fact, additional parts and services at these shops are often
billed at inflated prices, and in many cases they're not even necessary.
Sometimes the "extra" services aren't done and parts are not
replaced, but customers are still charged for them. (These are known as
"phantom" services and repairs.)
What kinds of shops run these ads?
Typically, it's the ones who use quotas, commissions and/or contests to
get more sales revenue out of their employees. And the more they advertise
cheap repairs (or free inspections), the greater the chance they'll try to
sell something that's not really needed. These scams are actually quite
common, and many people have fallen for them because they never suspected
that a "big-name" company would be using such deceptive
For more information on auto repair scams
& secret warranties, be sure to read What Auto Mechanics Don't Want You to Know by Mark Eskeldson (available at Amazon).
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