The cars were built to be almost perfect. California’s Bureau of Automotive Repair put them together carefully, documented every part, and sometimes left one minor problem in place. Then it hauled them on a trailer to somewhere near a Sears auto center, and an undercover agent drove the last stretch in for service.
From December 1990 to December 1991, agents made 38 of these runs through 27 Sears shops. In 90 percent of them, the state said, Sears sold parts or work the car didn’t need. The unneeded charges averaged $223. The worst was $550. After one visit, an agent pulled away and couldn’t stop at an intersection: the brake fluid lines had not been tightened.
The state had started looking after complaints about Sears nearly doubled. Behind the bills, it said, was a pay plan. “Employees were instructed to sell a certain number of repairs and services every eight-hour shift, such as alignments, springs and brake jobs,” said the head of the bureau. Current and former employees told the bureau that if they missed those goals, their hours were often cut or they were moved to another department.
In June 1992, California moved to revoke the repair licenses of all 72 Sears auto centers in the state. “There’s a saying, ‘You can count on Sears,’” said Jim Conran, the director of the state’s Department of Consumer Affairs. “I’m here to tell you in auto repair you cannot.”
Sears called the investigation incompetent and seriously flawed. It denied cheating anyone, and kept denying it. But within weeks it had scrapped the sales incentives for its auto-center staff. Those incentives, the company conceded, had “created an environment in which mistakes did occur.”
The damage was already done. Sears’s auto-center sales in California fell 20 percent in June. By the company’s own figures, the scandal was costing it about $700,000 a day in lost revenue nationwide, and its name had become a punchline for Jay Leno and David Letterman.
In September, still denying any wrongdoing, Sears agreed to pay $8 million to settle California’s charges and 19 class actions, and to offer affected customers a $50 coupon each. It was ready to hand out at least 933,000 of them.