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May 10, 1999 02:00 AM

BFS FACING LAWSUIT ON ALLEGED REPAIR FRAUD

Vera Fedchenko
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    MEMPHIS, Tenn.—A potential class action lawsuit is seeking $400 million in damages from Bridgestone/Firestone Inc. for allegedly defrauding customers who sought automotive service from Firestone Tire & Service Centers. The suit was filed March 26 with the Circuit Court for the 13th Judicial District in Memphis on behalf of plaintiffs Nubar Yacoubian and his son, Berje. It claims BFS deliberately overcharged consumers for auto parts and services, charged for parts and services not actually rendered and performed unnecessary repairs for its own financial gain.

    Under Tennessee consumer law, a successful suit could be awarded treble damages, totaling up to $1.2 billion.

    On March 27, 1998, Berje Yacoubian took his father's car to a Firestone store in Memphis to check a noise in the starter. When he picked it up on March 31, the bill for labor and repairs totaled $2,265.72, according to the suit.

    The plaintiffs allege they were charged higher prices than BFS had published in its auto service pricing manual for various goods and services. Some of those charges included:

    A remanufactured starter for $159.99, which should have cost $87.99, according to the manual;

    A distributor cap for $109.99, when BFS' published price was $79.99;

    A labor charge of $38.50 for replacement of distributor cap wires when the standard rate was $13;

    $258 for timing belt labor when BFS' standard labor rates for 2.8 hours of labor should have resulted in a charge of $154; and

    $12.99 for crank case valve labor, but no corresponding listing of the part's installation.

    The suit also claims BFS perpetrated a ``scheme of deception'' throughout the U.S. from 1992 to 1998 by using a ``production volume incentive-based pay rate and quota system to encourage and force'' employees to make unnecessary repairs, overcharge for services and ``omit provisions of services contracted and paid for'' by customers.

    BFS auto service employees who failed to meet quotas for goods and services faced probation that would affect future pay raises or termination, the suit alleged.

    BFS was served with the suit April 15 and has a period of 20 days to respond, but that can be extended, according to James Clinton Garland Sr., one of the counsel for the plaintiffs.

    After BFS' response, the plaintiffs hope to file for class action certification and move to the discovery phase within the next 90 days, he said.

    Mr. Garland previously has litigated similar class action suits against Goodyear and Kmart Corp., both charged with selling unnecessary auto parts and services to customers nationwide. Goodyear settled its suit in 1996.

    The case against Kmart still is pending in Louisiana, he said. However, that suit lost its class action status in 1995.

    Currently, there are 1,363 Firestone service stores nationwide.

    After analyzing thousands of random invoices from Firestone stores in all 50 states, Mr. Garland claimed he and his associates found overcharges in all the bills: some for as low as $5; some costing consumers several hundred dollars more than the company's published prices.

    In many cases, customers have no expertise to recognize they were charged double labor rates for unnecessary work, he said.

    The suit states that Firestone store employees electronically enter a product code, which automatically brings up a price and description of product or service. A worker can't override that program, but could enter an incorrect charge by using ``miscellaneous'' or ``local parts purchase code'' at the time of entry.

    The invoices obtained by the plaintiffs' counsel showed that incorrect codes were entered that didn't correspond to the jobs performed, Mr. Garland claimed.

    The BFS Retail Division, based in Rolling Meadows, Ill., told Tire Business it is reviewing the situation internally and considering a course of action.

    The tire maker said it is ``committed to providing our customers with quality automotive service and products as well as total satisfaction.

    "As a charter member of the Motorist Assurance Program (MAP),...we strive to adhere to the highest standards of business conduct.''

    A BFS spokesman said the firm wouldn't comment further until after it completes its review of the case.

    Mr. Garland said BFS' participation in MAP ``just makes (the case) more offensive in the fact that they would present themselves as being part of a self-policing organization that's trying to prevent consumer fraud, but then they practice it daily.

    ``I think that when you have the fox guarding the henhouse, you're not going to save many hens.''

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