Md. budget woes hinder big consumer probes

June 17, 1992|By Michael Dresser | Michael Dresser,Staff Writer

Because of budget constraints, Maryland would be unlikely to conduct an undercover investigation of auto repair practices similar to those that resulted in allegations against Sears, Roebuck & Co. in California, the top consumer protection official in Maryland said yesterday.

California's 18-month investigation of Sears, which resulted in charges of fraud and a move last week to revoke or suspend the licenses of all 72 Sears auto repair shops in the state, has cost an estimated $350,000 so far, said Allen Wood, program manager with the Bureau of Auto Repair in Sacramento.

That cost could increase considerably as the case works its way through administrative procedures and the courts, he said.

William Leibovici, chief of the Consumer Protection Division of the Maryland attorney general's office, said an inquiry on that scale is unlikely here because his agency is "limited in our fiscal situation."

"That's a healthy chunk of change, and we've never spent that much on any investigation," Mr. Leibovici said. Maryland, unlike California, does not license auto repair shops.

Mr. Leibovici would not rule out the possibility that the state would conduct such an undercover investigation if it received enough complaints. He noted that Maryland is a much smaller state than California and said the costs of an investigation here would be smaller.

"We can do these types of things," he said. "We just have to be more restricted than we were in the past."

Attorney General J. Joseph Curran Jr. said the annual budget for his office has fallen from $15 million a few years ago to slightly less than $13.8 million.

As a result, he said, his office has to be more "selective" about the investigations it launches. "If it's something that really deserves our attention, we'd find the money," Mr. Curran said, even if it meant going back to the governor for a special appropriation.

In the Sears case, Mr. Curran said, his office would be able to benefit from investigative work done by authorities in California and New Jersey, which issued a harsh report on the company's auto repair practices Monday. He said Maryland officials would look over the reports from those states before deciding whether to launch an investigation.

Mr. Leibovici said his office had received fewer than 100 complaints against Sears over the past three years, which he said was not excessive for a company that handles as large a volume of repairs as Sears.

He said that since the news from California broke last week, he had received "a couple of calls" from consumers who suspected they might have been the victims of unnecessary repairs at RTC Sears.

Mr. Wood said California launched its investigation after the state agency noticed an increase in the severity and number of consumer complaints lodged against Sears.

The investigation involved "a tremendous amount of staff time," Mr. Wood said. The state agency took cars and inspected them in advance to make sure the system was basically sound except for a routine problem such as worn brake pads, he explained. Then investigators -- posing as consumers -- took the cars to Sears auto centers around the state.

Mr. Wood said that besides repairing the brake pads, Sears mechanics routinely sold agency investigators such things as shock absorbers, brake calipers and suspension components.

"They even sold us radiator hoses," he said.

The California official added that Sears employees told investigators that the company "had a quota system where employees were instructed to sell so many parts per hour" or face reprimands or even termination.

Sears denied the charges. "We strongly disagree with the allegations and will vigorously oppose them in court," the company said after the charges were announced.

But after the New Jersey report was issued Monday, Sears took a much softer line, announcing an internal review and expressing its "deep concern" over the allegations.

Nancy Erickson, a spokeswoman for New Jersey's consumer protection agency, said her state's investigation cost "about $250," excluding the cost of investigators' time. The investigation, which did not specifically target Sears, involved four investigators and took about four months, she said.

The New Jersey investigators visited 38 auto repair facilities, each time bringing in a car with a disconnected alternator wire.

Eleven recommended unnecessary repair work, such as a new alternator or battery. Among the 11 shops were all six Sears centers visited, the New Jersey investigators found. The investigators did not actually have the work done but based their conclusions on written estimates, Ms. Erickson said.

Like Maryland, New Jersey does not license auto repair shops. The investigation there was launched because "we wanted to see what makes the cost of owning a car so high in New Jersey," she said. As of yesterday, New Jersey officials had not decided whether any enforcement action would be taken as a result of the investigation, she said.

Mr. Curran indicated that Maryland was unlikely to launch any investigation that was not prompted by complaints against a specific company. "To the best of my knowledge, most of our investigations are complaint-driven," he said.

The Maryland attorney general's office does have some experience at conducting long, labor-intensive undercover investigations of auto repair overcharges.

In January 1988, after a six-month probe that employed six investigators, the attorney general charged Cottman Transmission Inc. with four violations of the state's fair-trade laws. The company was taken to court and ordered to pay restitution for deceptive practices.

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