Beware the Service Gyp!, September 1934 Radio-Craft

Repair service businesses have always gotten a bad rap for deliberately inflating part and labor costs - often deservingly so - but it's a shame the honest brokers are dragged down by the scum (or "gyps" as this article calls them). Come to think of it, the word "gyp" is likely short for "gypsy," which is sure to offend someone these days. Along with admonishing customers to beware of shyster servicemen, there is an example of an orchestrated "sting" operation whereby a radio set was intentionally "broken" in a certain way with witnesses as to the fault, and then a couple dozen repair services were called upon to troubleshoot and fix it, then present a bill for their work. The result is interesting, and even resulted in one guy being prosecuted. The story reminds me of a similar much-publicized sting that was done back in the 1990s against car repair services that were creating leaks in brake lines and then charging customers to fix them.

Honest Service Men are thorough and capable.

This is an expose of the racketeering methods of "gyp" service organizations who advertise free radio service, or 50c inspection service. It is not meant to apply to the Service Men or service organizations who conduct their business on a legitimate basis. As a matter of fact, the honest service individual has recognized the existence of this evil and many have written us complaints concerning these practices, seeking advice to combat them.

The honest Service Man who does his work well and expects a fair return for his labor. is in no position to combat the "gyp" who offers free service. with the evident intention of later making an exorbitant service charge. Not unless he stoops to the same practice to cope with this competition! Fortunately, action is being urged against such practices, and we know of no better way to rid this industry of such parasites than by exposing their methods.

The radio industry, from manufacturer down to Service Man, today is bemoaning its fate and while the economic depression has no doubt been the major cause of the poor state of the radio industry, I feel that they have themselves to blame to a great extent.

Midget radio receivers had their origin in the plants of small manufacturers and the public at that time did not take them seriously, but considered them novelties or toys. However, when the larger manufacturers followed suit and dignified the midget business by manufacturing such sets themselves, the whole picture was changed. Can you blame the average individual for feeling that sets for $10.00 are really worthwhile instruments if they possess the trade marks of the largest radio manufacturers in the world? Surely the public has a right to feel that these companies are not manufacturing "junk," and that if they can make a radio set that they are willing to put their name on, to sell for an extremely low price, it is only a waste of money to buy an instrument selling for from five to ten times that price.

Such men are equipped with all test instruments.

Fig. A - The "racketeer" first removes the set.

Fig. B. - Then phones back the exorbitant charge.

While I am primarily concerned with the radio Service Man, I mention the above facts to show that the Service Man has followed the example set by the "brains" of the industry and as a result he now finds himself in a deplorable condition. Just as the larger manufacturers dignified the midget business, so has the Service Man lent dignity to the 50c service proposition.

(Editor's note: This magazine does not entirely agree with the author on this point. The facts of the matter are that there is a place for midget radio receivers, and that a good many homes have such a set to supplement the larger console receiver. This prevents domestic quarrels as to which popular program one may select. The unfortunate part, which the midget is responsible for and which the author fails to mention, is that many manufacturers are listing these sets at a very narrow margin of profit to themselves and to the dealers. In so far as service work is concerned, what chance has a Service Man of honestly estimating a major repair that may total over $10.00 on a set that is over 2 years old? The customer's retort to such an estimate is generally to the effect that he can purchase another set, even though a midget, for that price!)

Another problem of the Service Man concerns these sets themselves. Due to their compact construction, and complicated circuits because of the use of so-called "composite" tubes, it is a most difficult type of receiver to service. An investment in elaborate test equipment and up-to-date service manuals is required, in addition to continuous study of new circuits, tubes, theory, etc. - if the Service Man is to be successful in servicing this type and the larger new receivers that are being manufactured. How can the Service Man obtain a fair return for this investment of time and money, when he must spend hours to repair a midget receiver that must be, of necessity, estimated low, since a similar new set can be purchased for a paltry few dollars?

When a customer sees an advertisement of an apparently large, reputable organization offering free radio service, or for 50c (so-called "inspection" service), there is no reason why he should not feel that it is a legitimate charge for honest, efficient service. However. we all know that this is ridiculous and that the only way such an organization can survive is by using racketeer methods.

Everyone connected with the industry knows that the game is to take the receiver to the shop regardless of what mayor may not be wrong and to then notify the customer that the set needs a new power transformer or some other part and that the charges are $15.00 or $20.00. The only trouble with the set might have been, if a D.C. set, a reversed plug, or in some other set - a bad tube.

(Editor's note: This is only a small sample of some of the practices of "gyp" Service Men. Some even go so far as to resell the tubes [which are still good, but nevertheless used] which they have replaced on previous service calls. Others resort to the nefarious practice of actually creating additional trouble in a radio receiver when a customer refuses to have the set "repaired" when the exorbitant estimate is learned.

Personally, we believe that the majority of individual Service Men are honest. The service organization that advertises or claims free service or service for 50c is the outfit that the consumer should beware of.)

While we all know that ethics in all lines of business are subject to great debate when measured against ideals of strict honesty, the practices in the radio service industry cannot be justified except by comparing them with methods used by racketeers operating outside the law. The Better Business Bureaus have had many complaints from consumers who have been fleeced by the radio service racketeers and, while they have done much good in their attempts to protect the public, their power is limited unless they are willing to actually bring the culprit to court. This involves the expenditure of money besides requiring detailed proof that the power transformer or other parts were not supplied or not needed, and very few persons desire to make martyrs of themselves and testify to that effect. Besides it is rather difficult to sometimes prove the truth, especially in a court of justice where cases are judged on technical details. As a result the service racketeers are permitted to continue in their illicit practices.

As an indication of the "racket" methods and inconsistencies of the "gyp" Service Man, herewith is a reprint from a bulletin published by the Kansas City Better Business Bureau.

"Complaints regarding the servicing and charge of certain radio repair men several months ago led to an investigation by the Better Business Bureau which, thus far, has brought one radio Service Man before the prosecuting attorney's office, eliminated 'free estimate' advertising, stopped a number of 'gyp' repair men and practically cleared the radio repair field of unfair practices.

"Approximately 400 radio service advertisements were stopped. The majority were those offering free radio inspection as in the following:

Expert Radio Repairing; guaranteed; all makes; Free Estimates in your home; any time; anywhere; lowest prices. Call ....

"Complaints indicated that the set owner, lured by the free inspection offer, called in the man offering this type of service. If of the 'gyp' type the repair man sometimes insisted upon taking the chassis to his shop for a check-up. Later he called stating the set needed extensive repairs and often charged exorbitant prices for alleged repairs which actually were not made.

"The 'free inspection' plan thrived due to the set owner's misconception of the cost factors involved in radio repair work. Contrary to popular opinion, the Service Man derives most of his profit from his labor. For this reason the legitimate radio Service Man makes a specified fixed charge for a call and a standard charge for various service operations.

"The Bureau felt this 'free inspection' plan to be one of the trade evils having the tendency to break down public confidence in all radio service advertising and evolved a plan to check both the 'free inspection' advertisers as well as those having a call charge.

Fig. C - Honest Service Men estimate at homes.

Fig. D. - Auto-radio men are victims of manufacturers' sales "racket" re free installation.

"Accordingly, a popular make radio set was tested, equipped with new tubes, passed upon as being in efficient working condition by a committee of seven expert radio technicians and set up in the home of a person cooperating with the Bureau. A lead wire to the speaker voice coil was disconnected, thus making the speaker 'dead,' and various radio repair concerns were called to service the set and estimate the cost of repairing it to insure satisfactory reception.

"Following each inspection and estimate, the set was checked by the committee before the next Service Man called. Typical reports as to what was wrong with the radio receiver and the estimated cost for repairing as given by some of the 'free estimate' Service Men were as follows:

(5) New condenser, $1.75. Output transformer, 85c, plus labor. Total charges, $4.60.

"Out of approximately 25 'free estimate' calls a small percentage of the Service Men found the actual trouble and offered to repair the set for $1.50!

"Using the same 'prepared' set the Bureau then called a number of radio service concerns or individuals charging from 75¢ to $1.50 for service calls regardless of whether or not they make the repairs necessary. The same wire was disconnected.

"Approximately 90 percent of the 'pay service' concerns found the loose wire at once and either repaired the set at no extra cost above the service charge or made an additional charge. No estimate was more than $1.50.

"Only one of this group attempted to run up charges on the set. This operator, who charged 75 cents for the service call, stated the radio had a burned-out condenser which would have to be replaced and that it also needed one. H.P. resistor, one 250,000 ohm resistor, all loose connections soldered and the speaker cone tightened. His repair charges were set at $6.25.

"Following his estimate the set was checked by the committee and it was found that additional wires had been cut. These were left as found but all parts were marked by a Bureau investigator in the presence of the committee. The Service Man was then called to pick up the set and repair it.

"Upon its return the radio was examined. The wires had been repaired but none of the parts charged for had been replaced!

"The repair man was called before Michael W. O'Hern, assistant prosecuting attorney, and was confronted with the marked radio set and the receipted bill showing the parts charged for.

"He admitted his guilt and asked for leniency. No announcement yet has been made by Mr. O'Hern as to whether or not action will be taken against this operator.

"This radio service investigation is being continued by the Better Business Bureau. Other sets have been placed in residences to check the claims of repair men suspected of defrauding the public. Only by constantly combating such evils can the public and legitimate radio service concerns be protected."

(Editor's note: In New York City the service racket is far worse than that depicted for Kansas City. The editor in going through the files of the N. Y. C. Better Business Bureau found an astonishing number of complaints against "gyp" radio service organizations, many of which, through the meritorious efforts of. the B. B. B. culminated in a satisfactory adjustment.)

The radio Service Man has furthermore been encouraged to follow these practices by the urging of the largest reputable manufacturers. When large tube manufacturers advise the radio Service Man to offer to inspect the customer's radio set without any charge with the idea in mind of selling the customer a new set of tubes, what is he doing?

First, he doesn't care whether the Service Man makes much money but is only interested in selling tubes. Second, the Service Man says to himself. "If these tube manufacturers have decided that this is the legitimate way for me to conduct my business. it must be, for who am I to question the intelligence and plans of million dollar organizations?" Third, the Service Man is led to believe that his services are not worth anything and that his sole income is to be derived from the sale of tubes or other parts whether the customer needs them or not.

(Editor's note: There should be a line of distinction here. While the margin of profit on tube sales is indeed small, still we believe it is fair return to the Service Man to reimburse him for his labor in testing the tubes, overhead, etc., providing the tubes are brought in for testing. Where a service call is made and tubes are shown to be at fault, a reasonable charge should be made for the trip in addition to the list price charge of each tube that is changed. Unfortunately, we must admit, very few Service Men are content with the small profit that is made on such a sale, and therefore there arises a tendency to invoke racketeering methods for making a service call pay.

We doubt if the manufacturer can be blamed, except perhaps in regard to his recklessness in selling to "cut price" dealers. Because of "cut prices" in tubes "gyp" service methods have been encouraged, since Service Men cannot possibly make a service call pay on the narrow margin of profit obtainable on the sale of a few tubes.)

After reading the above, you might say just as Mark Twain once said, "Everyone complains about the weather but no one does anything about it." Mark Twain's statement is very true for obvious reasons, but surely something can be done about the radio service situation.

Radio manufacturers continually emphasize the importance of the Service Man and in connection with automobile radio equipment, they even go so far as to investigate and appoint official service stations so that their products will be properly installed and serviced. However, do they try and see to it that the Service Man gets a legitimate charge for honest and efficient service? They are not concerned with his welfare, for if the Service Man is foolish enough to conduct his business on an unsound basis let him suffer.

Here is the point where something can and should be done. Let manufacturers cease advertising automobile radio receivers with free installation, as this sort of pricing does not allow the dealer to pay a legitimate charge to the Service Man for installation and service. The manufacturer should look further than the end of his nose and realize that, inasmuch as the Service Man is getting very little for his services, he is going to be compelled to use dishonest methods to get money from the public so as to survive. All this in the end tends to lower the confidence of the public in radio in general and has its adverse effect upon the manufacturer.

(Editor's note: The cut-throat service organizations employ a great number of tricks that will not pass the spotlight of square business methods. We are very much interested to hear of some of these shady practices as used by such radio houses, and we urge "legitimate" radio men to write to us and let us know of any unfair competition that makes it difficult to run an honest business.)

Beware the Service Gyp!September 1934 Radio-Craft

Beware the Service Gyp!
September 1934 Radio-Craft