A New Chapter in the Long Deceptive Sales Saga
March 1, 2023
Security Info Watch
Types : In the News
After a frenzy of media attention in the mid-2010s, a massive punitive judgment against Vivint last week has once again put the issue in the spotlight for the alarm industry.
Back in December 2014, David Bleisch, who was at the time the Chief Legal Officer for ADT, appeared on the ABC News show 20/20, warning about rival companies “lying and swindling people into switching, unknowingly switching their monitoring company.”
He said ADT had received around 4,200 complaints in 2014 alone from customers who said a door-to-door salesman who claimed and appeared to be from ADT tricked the customer into signing up with another home alarm company.
Lesson Not Learned
In late February, the alarm industry was jolted back into the discussion by a whopping $189 million judgment in a North Carolina court against Vivint for doing pretty much the same thing – only this time it was to CPI Security. Perhaps Vivint will be the next company to earn that “notorious” moniker?
“First, the sheer size of the verdict – nearly $190 million dollars – is very substantial,” explains Security Business legal expert Timothy Pastore of Montgomery McCracken Walker & Rhoads LLP. “Second, the largest component of the award was not for direct or consequential damages but was for punitive damages – meaning the jury intended to punish Vivint for what the jury determined was deceptive and unfair business practices.”
Pastore explains that customer theft is a big threat in the security industry, particularly for residential customers. “This is because residential customers are susceptible to claims that, unless they sign up with a new company, their security system will not work,” he says. “Sometimes the claim is that their existing alarm company went out of business; here, the allegation made by CPI is that Vivint claimed it merged with CPI. In either case, the customer simply wants a functioning alarm system.”