Ever been suspicious when you took your car in for a simple repair and the mechanic told you it required a lot of expensive work? Then consider this -- after a four year, undercover investigation, the State of California charged the owner of 22 Midas auto shops with a bait-and-switch scheme.
In a settlement, the franchise will pay $1.8 million and sell its shops back to Midas.
Attorney General Edmund G. Brown Jr. says the settlement prevents Maurice Irving Glad from owning or operating an auto repair shop in the state because his shops "deceptively lured" customers with cheap brake specials and then charged hundreds of dollars for unnecessary repairs.
"For years, Glad ran a bait-and-switch scam, in which he deceptively lured customers into his Midas shops with cheap brake specials, then charged them hundreds of dollars more for unnecessary repairs," Brown said. "Our settlement makes sure that Glad will never own or operate an auto repair shop in California again."
Brown filed suit against Glad in June 2009. The investigation revealed that Glad regularly advertised $79 to $99 brake specials at his Midas shops to draw in customers and then often charged another $110 to $130 for unnecessary brake-rotor resurfacing. In some cases, customers were charged hundreds of dollars more for repairs that were not needed or never performed.
The settlement requires Glad to pay $1.8 million in damages, investigative costs and attorney fees, plus permanently prevents the franchisee from applying for or holding any license or registration issued by the California Bureau of Automotive Repair or any successor agency. He is also prohibited from engaging in any business that requires any type of license or registration issued by the California Bureau of Automotive Repair or any successor agency.
Midas to honor guarantees
In addition to acquiring Glad's 22 shops, Midas International Corporation has agreed to honor any and all guarantees or warranties previously made or given to customers.
This isn't the first time the auto shops owner has been in hot water with the state. In 1989, the state attorney general sued Glad for similar violations, which resulted in an injunction prohibiting his shops from performing unnecessary repairs, charging for services not performed, or using scare tactics to convince customers to purchase unnecessary parts and services. The California Bureau of Automotive Repair initiated its recent investigation into Glad's Midas shops to monitor compliance with the injunction.
Undercover agents, posing as customers, conducted approximately 30 sting operations at Glad's shops. In total, there were more than 35 incidents, involving 105 violations, in which shop managers, mechanics and employees made false or misleading statements to pressure customers into purchasing unnecessary parts and services. On average, the shops charged undercover agents almost $300 in unnecessary brake-rotor resurfacings, brake-drum repairs, brake adjustments, brake-cleaning services and other services.
"Overselling of services has become an increasing problem," said California Bureau of Automotive Repair Chief Sherry Mehl. "It amounts to fraud and seriously harms the consumer. That's why we aggressively work to find and shut down these shops."