Sears Settles Wheel Alignment Case

March 17, 2004
Sears Roebuck and Co. will pay more than $625,000, including approximately $125,000 in restitution to thousands of New Jersey consumers, to settle allegations that it ran auto centers that defrauded customers in connection with the sale of four-wheel alignment services.

The settlement was announced by New Jersey Attorney General Peter C. Harvey and Division of Consumer Affairs Director Reni Erdos.

The settlement agreement comes more than a year after the State filed suit against Sears alleging that the company’s auto centers throughout New Jersey repeatedly violated the State’s Consumer Fraud Act by charging for “four-wheel alignments” on vehicles which did not allow for rear-wheel adjustments.

Many of the vehicles in question, the State alleged, were designed to undergo only “two-wheel thrust angle alignments” — which involve adjustments to only the front wheels.

It's hardly the first time such accustions have been made. A 1999 class-action suit in Illinois claimed Sears defrauded customers nationwide of $400 million by charging for wheel balancing it did not perform. The suit charges that up to 30 million customers were defrauded between 1989 and 1994.

Sears settled a similar case in Florida recently by admitting no wrongdoing while paying $580,000 to the state and offering free wheel balancing to customers.

During the period at issue, Sears Roebuck owned and operated the nationwide chain of auto facilities under the names “Sears Auto Centers” and “National Tire and Battery” (“NTB”). At that time, there were 24 Sears Auto Centers and two NTB facilities in New Jersey. Sears continues to own and operate the Sears Auto Centers, but no longer owns and operates the NTB facilities.

“Through its practices, Sears charged consumers for a service they did not – and could not – receive,” Attorney General Harvey said. “The agreement requires Sears to refund to New Jerseyans its ill-gotten gains.”

Sears will pay New Jersey $500,000 to cover future Consumer Affairs’ initiatives. Sears will also pay the State’s costs — an amount to be determined — in connection with its investigation and litigation of the case against Sears.

Also as part of the agreement, Sears will pay $125,440 to 12,544 consumers in restitution, representing a $10 payment to the known consumers who, between Jan. 1, 1997 and Oct. 1, 2000, purchased a four-wheel alignment from Sears and who the State alleged should have been charged for a two-wheel thrust angle alignment. The $10 payments represent the price difference between the four-wheel alignment and the two-wheel thrust angle alignment.

“Most people lack the technical expertise necessary to know what kind of services can and cannot be performed on their vehicles,” Director Erdos said. “As a result, consumers brought their vehicles to a place they trusted. Unfortunately, we allege, Sears used that trust against consumers.”

The Division of Consumer Affairs has provided Sears with a list of the 12,544 affected consumers along with their addresses. Sears will make restitution payments directly to those consumers by April 2, 2004.

In addition, Sears will pay $10 to additional affected consumers who, within one year of the agreement, come forward with proof (in the form of a receipt or invoice) that they purchased four-wheel alignments from Sears between Jan. 1, 1997 and Oct. 1, 2000 for their vehicle where adjustments to the rear wheels were not possible or where rear adjustments were possible only with the addition of aftermarket kits/parts that were not installed by Sears at the time the alignment was performed. Such consumers should contact the Division of Consumer Affairs’ Consumer Service Center at 1-800-242-5846 or 973-504-6200 (if calling from outside the State of New Jersey).

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