Vivint's woes continue as federal jury awards $189 million in damages to competitor
Vivint Smart Home’s string of legal troubles is continuing, as a federal jury recently awarded a competitor of Vivint $189 million in damages after an eight-day trial in North Carolina.
Charlotte, N.C.-based CPI Security Systems sued Vivint in 2020, claiming Vivint was using deceptive and improper sales practices to steal its customers.
The lawsuit alleged Vivint, based in Provo, Utah, targeted CPI through misleading statements — such as saying it represented CPI or was buying out the company — to poach its business. The lawsuit took more than two years to reach a jury, which began deliberating last Thursday and delivered its verdict Friday in favor of CPI.
Punitive damages made up $140 million of the verdict, while $29.3 million was for violations of the North Carolina Unfair and Deceptive Trade Practices Act; $13.5 million for unfair competition, $5.4 million for trademark violations, and $1.5 million for interfering with the contracts of seven identified CPI customers.
Vivint: 'Extremely Disappointed'
In a statement, Vivint said it would appeal the verdict.
“We are extremely disappointed with the jury’s decision, which we believe is not legally or factually supported,” the company said. “Furthermore, the amount of damages awarded are egregious and completely disconnected from the total economic impact of any activity that CPI claims to have occurred.
“We remain committed to operating with the highest standards of integrity and delivering exceptional service to customers.”
CPI’s lawsuit in U.S. District Court alleged that after signing contracts under the false pretense of Vivint’s scams, customers would later come to realize Vivint’s claims were untrue – but Vivint made it difficult for customers to cancel their contracts.
In a lengthy statement, CPI shared some of the allegations made in court. For example, the company said, a Vivint corporate training video encouraged sales representatives to press themselves into customers’ homes, intentionally not allowing the customers to refuse entry.
CPI said numerous witnesses in court spoke about their experiences of being scammed or targeted by Vivint’s deceptive sales practices. For example, one CPI customer testified a Vivint sales representative knocked on his door, saying, “I was one of the guys that installed your CPI System.”
The CPI customer told the Vivint representative that he knew that was not true. To which the Vivint representative replied, “What I meant to say is that I am with Vivint, the parent company of CPI.”
After the representative tried to get into the customer’s home three times, the customer was concerned about his family’s safety, according to testimony. He had his daughter call the police, grabbed a softball bat for protection, and made the Vivint representative sit in his yard until the police arrived.
Another CPI customer testified that a Vivint sales representative claimed Vivint and CPI were related companies. Unfortunately, the customer believed the sales representative and ended up in a contract with Vivint. The customer had to jump through several hoops to get out of the contract with Vivint, including threatening legal action.
In another instance, a CPI customer, who happens to be visually impaired, was told CPI was going out of business and that there could be a lapse in her alarm coverage, according to testimony. Concerned for her safety, she agreed to have Vivint install a system.
Feeling uneasy about what just happened, the woman called CPI to verify that CPI was going out of business. She then realized Vivint had deceived her, testimony showed.
'Stop Their Deception'
After the verdict, Ken Gill, CEO and founder of CPI, commented said the case wasn’t just about his company’s business, but about Vivint’s business practices.
“I would have thought Vivint’s mission would be similar to ours; protecting and keeping our community members safe,” Gill said after the verdict. “But Vivint’s practices clearly display the opposite, which is why we are holding them accountable for preying on the vulnerable.”
“I hope today’s verdict will stop their deception for good,” Gill said.
Vivint – which was just acquired by NRG Energy for $2.8 billion in cash -- has had a checkered history with government regulators and rivals.
In January 2021, the Department of Justice fined Vivint $3.2 million for making false statements to secure financing for customers’ purchase of Vivint products. In 2018, Vivint agreed to pay $10 million to rival ADT to settle claims highly similar to what CPI would file two years later.
Other developments include:
- An as-yet unsettled legal patent infringement battle with ADT, where both sides have sued each other over the patents on various technologies;
- Company founder Todd Pedersen suddenly stepping down as CEO in May 2021 and being replaced by Bywater, who was CEO of Vivint Solar, two weeks later;
- A $20 million settlement with the Federal Trade Commission regarding a Fair Credit Reporting Act (FCRA) claim;
- A dispute with Alarm.com over the payment of license fees; and
- A newly formed partnership with New American Funding, one of the nation’s largest independent mortgage companies.
The Charlotte Observer contributed to this story.
