Calif AG Reaches $1.8 Million Settlement With Midas Shops Owner

Date : 01/25/2010 @ 1:15PM
Source : Dow Jones News
Stock : Midas, Inc. (MDS)
Quote : 11.5  0.0 (0.00%) @ 2:05AM

Calif AG Reaches $1.8 Million Settlement With Midas Shops Owner

Midas (NYSE:MDS)
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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 
 
 

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