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Kudos to the shop for finding the leaky hose. Bricks to the shop for not communicating this ahead of time. I doubt the shop was incompetent, irresponsible or dishonest. In fact, I commend them for not sending out a regulator that had a leaky hose. It's obvious that they have some great standards but they obviously need a customer communications class.
For most shops, replacing a leaky hose is a no brainer. IT'S LEAKING! They aren't making much if any markup on the hose and the reg set isn't dive worthy with a leak, now is it? They are probably flabbergasted that you have an issue with them simply changing it out. It's a problem and frankly, the LDS is not the only one at fault here. It's just as important for the consumer to communicate what they want clearly.
Give your LDS boundaries when you bring your gear in. Like the battery, if they do it anyway, you have clear grounds for not paying them. Clearly write for them that you expect to pay $X unless they get prior approval ahead of time. Be proactive instead of merely relying on being reactive.
I was a service manager for Goodyear for a long time. I was sent to rehabilitate under performing service centers in the Central Florida area. I was often asked the secret of my success and frankly, it's the same secret I use here: No secrets. It takes a dedication to communication and frankly that's on both sides of the fence. So many times a customer would show up asking for a tune up and I would stop and ask them why. Some would tell me why, but a number of customers thought they were smarter than me and would self diagnose the problem. When I gave them the car back and it was doing the very same thing, there would always be a problem. Why? Unrealistic expectations on the part of the consumer.
So, ask questions, set limits, discuss expectations and most importantly: put it in writing! It doesn't have to be long or full of legalese. Remember, it takes two to communicate and you'll have a much better experience if you take the initiative.
Yes, something should be done about a leaking hose. But it should never be done without the owner's consent.
From my limited experience, everything that is purchased in an LDS has at least a 100% markup, maybe more.