Cheating company will pay $3 million

March 23, 2009 6:45:00 PM PDT
A multi-million dollar settlement has been announced against a company accused of unfairly overcharging as many as 6,000 Californians annually for sometimes unnecessary home repair work.

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7 On Your Side first began investigating this company in 2003 and knew the company as Pick Red, but throughout its history the state says it has been known by numerous other names. Now, for the first time, authorities have gone after the parent company SRVS Charge Inc.

State investigators have released video of an undercover sting operation against SRVS and its numerous affiliated companies in the Bay Area. The Contractors State License Board told ABC7 what happened at the sting.

"All we did is we tripped the GFI, the little red button that you see on a number of your outlets. All he would have had to have done was press the reset button and it would have been working again. But, he told us he we had 10 breakers that needed to be replaced to the tune of $1,600," said Rick Lopes, from the Contractors State License Board.

70-year-old Ruth Fernandez of Hayward says she knows exactly how the scheme works. She ended up paying American Electric $2,300 for just 90 minutes of work to fix a broken light. State investigators told her she should have paid no more than $600.

"They should be closed down. They should never take advantage of a person. I'm a senior citizen. They shouldn't take advantage of anyone. That's why I was angry," said Fernandez.

Her story is very similar to numerous stories 7 On Your Side reported in 2003 about Pick Red, a company believed to be an SRVS affiliate.

In 2003, Michael Finney traveled to Glendale in Southern California to try to get some answers. A Pick Red representative told him they did not want to answer any questions and the 7 On Your Side crew left.

The state suspended Pick Red's license, but the victory was short-lived.

"They would operate under one name like Pick Red. In the case of them, we actually revoked Pick Red's license. What they did, they would morph into another company license they had gotten," said Lopes.

On Monday State Attorney General Jerry Brown announced what the Contractors License Board is calling the largest settlement of its kind in its 80-year history. SRVS will pay the state $3 million in restitution, legal fees, and penalties. $1.3 million of the money will be set aside to refund victims.

But, SRVS does not admit to any wrongdoing.

In a statement over the phone with 7 On Your Side, the company's attorney Bob Hahn said, "We obviously contested those charges on behalf of the company and don't feel they were true. The decision to enter the settlement was based on cost to contest the charges. There were no admissions made on part of client."

"Oh, I'm happy. I am so happy they're not going to cheat people anymore," said Fernandez.

The settlement covers any consumer who can document they did business with SRVS Charge Inc. or its affiliatated companies over the last four years.

According to the Attorney General, those companies are:

  • American Electric
  • American Home Repairs
  • 59 Minute Services
  • Cal Repair Services or Pick Red Plumbing
  • Answering Resources Inc or Thrifty Electric
  • Orbell Enterprises Inc. or Plumbing One
  • USA Services Inc.
  • Love My Home Inc.
  • Electric Avenue (formerly a Plus Electric Company)
  • American Electric 911 Fast Inc.
  • Pro Electric Company
  • RG Electric
  • Pacific West Heating and Air Conditioning
  • Here are additional comments by attorney for SRVS Charge Inc, Bob Hahn:

    "SRVS Charge Inc. and its affiliates provided legitimate emergency home repair services throughout California and several other states designed to provide round the clock emergency repair service to all citizens. Business was developed primarily through telephone advertisements and no particular demographic group was "targeted" and no particular demographic group responded more to these advertisements. Such an allegation was never proven or substantiated by CSLB or any other agency.

    "The CSLB release refers to '...a massive scheme to defraud thousands of California consumers out of millions of dollars by charging exorbitant fees for substandard electrical, plumbing and heating/air conditioning repair services.' Again, this statement is inaccurate and irresponsible to the extent that it becomes a false statement. At the peak of its operations SRVS Charge, Inc. serviced approximately 75-90,000 consumer calls a year and was subject to less than .05% of these calls generating complaints, and even less moving into CSLB actions. It is impossible to believe that SRVS Charge, Inc., could have relied upon a 'massive scheme to defraud...' as its business model and serviced this many calls. It is hard to imagine that such a 'scheme' perpetrated on such a scale would not have led to an equally 'massive' response from the Board and The Attorney General's office."

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