California's attorney general announced a $1.8 million
settlement preventing a California man from owning and operating an
auto repair shop in the state, after allegations the Midas Inc.
(MDS) franchisee engaged in a massive "bait-and-switch" auto repair
scam.
As part of the settlement, Midas agreed to acquire all 22 of
Maurice Irving Glad's shops. A Midas spokesman said the company
wasn't disclosing the financial terms of the transaction. The shops
will operate without interruption and Midas agreed to honor any and
all guarantees or warranties previously made or given to
customers.
Attorney General Edmund G. Brown Jr. said customers were offered
cheap brake specials at shops owned by Glad, but were then
allegedly charged hundreds of dollars more for unnecessary repairs.
Glad has been a Midas store owner for more than 30 years, according
to the company.
Brown said undercover operations revealed that over four years,
Glad's Midas shops regularly advertised $79 to $99 brake specials,
and then allegedly charged extra for repairs that weren't needed or
even performed.
On average, the investigation found that shops allegedly
overcharged agents by almost $300.
In 1989, the state attorney general sued Glad for similar
violations, which resulted in an injunction prohibiting his stops
from performing unnecessary repairs or using scare tactics to
convince customers to purchase unnecessary parts and services.
Midas has since focused on retraining employees on marketing
practices. The company doesn't control the day-to-day operations at
its locations but does provide guidelines to the stores and
monitors customer complaints to keep up with recurring issues.
-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com