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EZ Lube agrees to pay $5 million to settle fraud case

January 03, 2008|David Haldane | Times Staff Writer

The Santa Ana-based EZ Lube Inc. automotive repair chain has been ordered to pay $5 million in a civil settlement for unfair business practices, authorities said Wednesday.

The settlement comes after a two-year investigation by the Orange County district attorney's office and the state Bureau of Automotive Repair during which undercover agents posing as customers found "dishonest conduct" in 30 of the chain's more than 75 Southern California stores, said Susan Kang Schroeder, a spokeswoman for the district attorney's office.

Most notable among the violations, she said, were the practices of recommending unneeded services and charging for services that were never performed.

"They had a policy requiring each person who came in to be sold a minimum of $75 in services," Schroeder said.

"That would be like telling doctors they have to perform a certain number of procedures whether someone comes in for cancer or a cold. It's unacceptable behavior. We live in Southern California. We have to drive -- we're all vulnerable."

John Allen, EZ Lube's vice president of operations, denied there was a company policy to defraud customers.

"We're not admitting any guilt," he said. "We're doing this to put it behind us. Litigation is costly, and at some point as a corporation, you just need to move forward."

Though there may have been some "bad apples" in the past, Allen said, "we've had a turnover in employees" since then, and any problems have been corrected.

Under the terms of the settlement, the company agreed, among other things, to refrain from making misleading written or oral statements to customers, document all services and charges, eliminate quotas requiring employees to maintain minimum average sales tickets, and install video cameras allowing customers in waiting rooms to observe work being performed on their cars.

One complaint came from Warren Hutchens, 85, of Westminster, who said that he took his 2000 Ford Focus with 18,000 miles on it to a Huntington Beach EZ Lube for a $17.99 oil change and ended up paying $82.62 for that plus a flush of his power steering system.

"They said the fluid was dirty," Hutchens recalls. "They kept pressuring me, and I gave in. Later I talked to my regular mechanic, and he said that was crazy, there wasn't anything wrong with the power steering."

"I didn't like it too well," Hutchens said. "I got suckered and never went back."

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david.haldane@latimes.com

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