With the summer door-to-door sales season set to get underway across the country, the Better Business Bureau (BBB) has joined forces once again with the alarm industry to raise awareness about deceptive sales tactics. To help drive the point home, the BBB held a press conference on Tuesday in Sacramento, Calif., in conjunction with The Monitoring Association (TMA), the Electronic Security Association (ESA) and ADT, to share statistics about the pervasiveness of the problem and to allow several victims to share their stories with the media.
According to Lynn Conner, interim president and CEO of BBB serving the Northeast California region, of the 3,500 business categories tracked by the organization in 2016, home security sales ranked in the top 25 for the most number of complaints received.
“The higher complaint ranking indicates that consumers are not asking enough questions or doing their homework,” Conner says. “It also tells us there are some bad apples in the industry.”
In addition, Conner says that nearly 160 home security companies have a C rating or below with the BBB. However, she adds that that is only a fraction of the 12,000 security companies that exist nationwide, which shows that the majority run an “ethical” and “trustworthy” business.
One of the reasons Conner says they continue to try and raise awareness about dishonest sales practices every year as it relates to the alarm industry is that only about four percent of consumers who are the victims of such scams actually file a complaint.
“Those consumers who fall victim to fraud either don’t know they’ve been ripped off or they know it but feel helpless,” she adds. “They’re often told that since they signed the contract and three days went by, there is nothing that can be done. For the thousands of complaints that are never reported, consumer education is the answer.”
Many of the tactics used by underhanded alarm salesmen follow a familiar refrain. One of the most common is pretending to be from the company who the home owner already has a monitoring contract with or perhaps the manufacturer of the panel that is installed and telling the customer they are there to “upgrade” their equipment. They then trick the consumer into signing a contract with a different company. Another devious pitch they try to use is telling home owners that the alarm company they are with has gone out of business and that they need to make the switch to this new provider or that they’ve been designated to take over the account.
One of the victims who spoke during the press conference was 86-year-old Marie Marshall of Sacramento who was conned into switching from ADT to another provider by a salesman who falsely claimed to be with ADT. She is now in a 60-month contract with that company and paying a higher monthly rate.
“By the time I realized I had signed with another company, it was too late,” Marshall says. “I am very disappointed that I got duped into doing business with a company that practices deceptive sales.”
According to some accounts, Conner says sales reps can make as much as $1,500 for each contract they are able to covert to their company, which provides a massive incentive for these people, many of whom are college students looking to pay off their student loans, to use whatever tactic necessary to get the consumer to switch.
“It causes considerable concern for me when unscrupulous sales reps give a black eye to the industry that I’ve been involved with for 40 years,” TMA Executive Director and CEO Jay Hauhn says. “We’re in the life safety business, credibility is incredibility important. When that sacred trust that customers place in us in violated, even by a small band of bad actors, we all suffer.”
“When an alarm company deceives a customer by lying or misrepresenting itself, those actions reflect poorly on over 500,000 industry professionals who work very hard to service millions of residential and commercial accounts,” ESA Executive Director and CEO Merlin Guilbeau says. “ESA recognizes we cannot control the behaviors of companies whether they are members or not; however, we do have a ‘Code of Ethics and Standards of Conduct’ we expect members to adhere to. There’s language specific to deceptive and unlawful business practices in that document. The code specifically addresses the need for ESA members to carry identification and be properly licensed.”
However, Guilbeau emphasized that they’re not trying to discourage companies from engaging in door-to-door sales as it has proven to be a successful business model, but rather to do so ethically.
“Let’s be clear…we are not ‘knocking’ door-knocking,” Guilbeau adds. “Door-to-door selling is a very effective tool, practiced for decades in our industry. But it needs to be practiced the right way, with honesty and integrity.”
Both Hauhn and Guilbeau believe the industry is making progress in putting a dent in deceptive alarm sales. Just several years ago, the number of people seeking information about or to complain about home security companies to the BBB was north of 600,000 but that dropped to just over a half a million consumers last year.
Hauhn also credited ADT and Protection 1 with helping to put a dent in deceptive sales with the various enforcement actions that they have taken against companies in recent times. For example, in 2014, ADT began offering rewards of up to $25,000 to those persons who could provide evidence of companies training their sales reps to be intentionally deceitful with customers. Just a year prior, ADT obtained a permanent injunction and received damages from two companies who they claimed misled ADT customers to believe that they were affiliated with them and that their alarm systems required upgrading.
Guilbeau said there have also been examples of some companies who after having been admonished for engaging in underhanded sales tactics have now cleaned up their act.
“I think we’ve had several companies that started out early on using [the ESA code] and have taken the approach of policing within their own company and dealing with these situations as they occur,” Guilbeau says. “In some cases, they have rectified the matter with the consumer by allowing them to go back to their original service provider and even, in some cases, making them whole financially. Some companies are taking this very seriously and disciplining employees when it is brought to their attention. The sad thing is there are some companies that are actually training their employees how to use these tactics and I think those are the companies that are still giving a black eye to the industry.”
The BBB has shared tips for consumers who are considering a home security system (bbb.org/homesecurity), and also released advice to potential employees who are being recruited to spend their summers knocking on doors (bbb.org/alarmsales).
