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GOVERNOR ANNOUNCES $8 MILLION SETTLEMENT WITH SEARS AUTO CENTERS; RECORD AMOUNT INCLUDES COMPENSATION TO INDIVIDUAL CONSUMERS

GOVERNOR ANNOUNCES $8 MILLION SETTLEMENT WITH SEARS AUTO CENTERS;
 RECORD AMOUNT INCLUDES COMPENSATION TO INDIVIDUAL CONSUMERS
 SACRAMENTO, Calif., Sept.2 /PRNewswire/ -- Governor Pete Wilson announced today an $8 million out-of-court settlement with Sears, Roebuck and Co. (NYSE: S), concerning charges that Sears sold unnecessary auto repairs and service to its California customers. The settlement, which also provides restitution to individual consumers, is the largest in the history of the Department of Consumer Affairs (DCA).
 "This settlement is tough, but fair. It sends a clear message that business practices that harm consumers will not be tolerated by this Administration," said Acting Secretary of State and Consumer Services Andrew Poat on behalf of Governor Wilson.
 The announcement was made at a noon press conference with Attorney General Dan Lungren, Contra Costa County District Attorney Gary Yancey and Director of Consumer Affairs Jim Conran.
 Under the agreement, Sears will establish a $4.5 million restitution fund. Three million dollars of the restitution fund, in the form of $50 coupons, will be used to reimburse consumers for questionable repairs and $1.5 million will be used to provide tools and equipment at vocational training programs for auto technicians within the state's Community College system.
 Additionally, for those customers who can demonstrate that the receipt of the $50 coupon does not adequately address their loss, Sears will honor its policy of "satisfaction guaranteed."
 The remaining $3.5 million will be used to reimburse the Department of Consumer Affairs' Bureau of Automotive Repair, the state Department of Justice and the Contra Costa County District Attorney for costs associated with the Sears investigation, and monitoring the auto repair industry.
 While all 72 Sears Auto Repair Centers in California will remain open for business, the agreement temporarily invalidates their registrations for 30 days. This provision will not take effect, however, if Sears complies with this settlement for a period of 3 years.
 After DCA announced the filing of accusations in June, Sears Chairman Edward Brennan announced that Sears was voluntarily halting a commission-based compensation plan they believe may have led to some abuses in their auto centers.
 "I believe this is an agreement that takes into consideration the best interests of the consumers of this state while sending a very strong message that we take our consumer protection role seriously," said Jim Conran, director of the Department of Consumer Affairs. "I am gratified that Sears voluntarily changed its compensation policies, and that it has taken important steps to restore the century-old trust it has traditionally had with its customers."
 The agreement concludes three months of intense discussions between the Department of Consumer Affairs and Sears to resolve charges that the firm had engaged in numerous violations of the California Auto Repair Act.
 In accusations filed in June, Sears was charged with making false or misleading statements to undercover investigators, willful departure from accepted trade standards, failure to clearly state parts and labor charges on invoices, and false advertising.
 The Bureau of Automative Repair (BAR), part of DCA, began its investigation in December 1990 after receiving a number of consumer complaints involving Sears. Working on its own and with the Contra Costa County District Attorney's office, BAR conducted 48 undercover runs against 33 Sears shops over a 12-month period. In the formal accusations directed against Sears, BAR investigators charged that they were sold unnecessary repairs 90 percent of the time.
 In addition to the financial terms of the settlement, Sears is prohibited from recommending repair or replacement of a given item unless it is established by manufacturer's specifications, accepted trade standards, or another reasonable basis exists for the recommendation.
 "We sincerely hope that this agreement will begin to heal the wounds that the consumers of this state and Sears, a major employer and contributor to California's economy, have suffered over the last 18 months," Poat said. The Settlement
 Sears establishes $4.5 million Restitution Fund
 -- $3 million to Sears automotive customers;
 -- promises additional funds as necessary to fulfill "satisfaction guaranteed" pledge;
 -- $1.5 million for the purchase of automotive repair tools for California Community Colleges auto repair facilities;
 Sears pays $3.5 million in costs
 -- funds paid to Contra Costa County District Attorney's office, Department of Consumer Affairs' Bureau of Automotive Repair and the state Attorney General's Office for investigative and settlement costs;
 -- aids in monitoring the auto repair industry;
 Registrations at 72 Sears Auto Centers invalidated for 30 days
 -- Stores will remain open for business;
 -- Invalidations stayed for three years pending completion of all terms and conditions of settlement. How Sears Customers Can Obtain Restitution
 Sears Auto Center customers who qualify may be issued coupons in the amount of $50 under the following program:
 WHERE: Apply at a convenient location to be established Nov. 1 within each of Sears 72 Auto Repair centers in California; or customers in California will be able to write to a single address, to be established by Sears Nov. 1, for the necessary application for such coupons;
 HOW: Upon application, customers of a Sears Auto Center in California who furnish satisfactory proof that they obtained service at such a center between Aug. 1, 1990, and Jan. 31, 1992, shall be issued a coupon for $50 if the service involved the replacement of one or more of the following items:
 -- a pair of brake calipers
 -- a pair of coil springs
 -- a pair of shock absorbers
 -- a master cylinder
 -- an idler arm. Customers purchasing multiple items listed above shall receive one coupon per item (or pair, if applicable) purchased.
 "Satisfactory proof" shall include, but not be limited to, a receipt for the transaction, an auto repair invoice, a declaration, or other reasonable evidence thereof.
 WHEN: Coupons may be used by the customer in any Sears department up to their face value to purchase any goods or services at any Sears store in the State of California for one year from Nov. 1, 1992, to Nov. 1 , 1993. Refunds will not be given for purchases made with coupons and the coupons will not be transferable.
 Prior to Nov. 1, 1992, Sears will advertise the availability of the coupons in multiple language newspapers and prominently display the terms of the coupon program in a public area of each Sears Auto Center in California. Sears & Roebuck Case -- Chronology
 Dec. 4, 1990 Department of Consumer Affairs (DCA)
 launches investigation through its Bureau
 of Automotive Repair (BAR)
 First run conducted at Sears Sunrise,
 Citrus Heights/Sacramento -- one of
 17 initial runs conducted
 12/90 - 6/91
 Case was evaluated and was decided that
 21 random runs would be conducted
 throughout California
 June 13, 1991 21 random runs conducted (June 13 -
 Aug. 29)
 December 1991 DCA/BAR meet with Sears officials in
 Oakland to notify them of investigation
 (National Service Manager, National Sales
 Manager, Senior Counsel, Auto Training
 Manager)
 January 1992 BAR conducts additional 10 runs to
 determine any change in Sears business
 practices
 June 10, 1992 Accusations signed by BAR Chief
 Jim Schoning
 June 11, 1992 DCA/BAR announce action to seek
 revocation or suspension of all 72 Sears'
 registrations in California
 June 24, 1992 Discussions begin between Sears and
 Attorney General's office, representing
 DCA/BAR
 Aug. 25, 1992 Tentative agreement is reached
 Aug. 31, 1992 Sears representatives sign $8 million
 settlement
 Sept. 2, 1992 Attorney General's office signs agreement
 on behalf of DCA/BAR
 -0- 9/2/92
 /CONTACT: Kevin Eckery of California Department of Consumer Affairs, 916-653-4090/
 (S) CO: California Department of Consumer Affairs; Sears Roebuck ST: California IN: AUT SU:


GT-RM -- SF002 -- 6059 09/02/92 16:16 EDT
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