The ADT Corporation, ranked No. 1 on the SDM 100, has filed suit against five dealers for deceptive sales practices and has announced that a U.S. District Court granted ADT’s request for a preliminary injunction against Capital Connect, immediately prohibiting the company and its sales agents from making false sales claims to ADT customers.
Capital Connect is one of five alarm dealers for Monitronics International that ADT recently sued based upon claims that they misled ADT customers into believing the companies were affiliated with ADT or that their alarm systems required upgrading. According to a press release from ADT, the legal actions were filed after hundreds of ADT customers complained over the past year that sales agents tried to swindle them into signing new security system contracts.
“ADT is committed to taking action to stop these shameful sales practices by bad actors in our industry,” said David Bleisch, ADT general counsel. “We will continue the battle against companies where these practices flourish in order to help protect consumers from falling prey to these swindles.”
Bleisch said he believes these types of deceptive practices ultimately need to be addressed at the dealer level. “Those hiring people need to act quickly,” he said. “They need to train them in the ESA Code of Ethics and Standards of Conduct, and when [the dealers] receive complaints, they need to investigate them and take disciplinary action when necessary.”
Bleisch said companies above the dealers have responsibilities as well. “It is incumbent upon companies above those dealers to refuse to buy from companies tainted by deceptive sales practices. When you take away the profit, you remove the motivation for these companies to continue in deceptive practices.”
Bleisch said these practices are not limited to ADT. He explained that door-to-door sales people see a yard sign advertising the homeowner has a security system, and they are tipped off to the homeowner’s interest in security systems. The usual course of action ADT has been taking is to immediately send cease-and-desist letters when they receive substantial complaints about a dealer. He said the number of complaints makes it clear the problem is rampant. Because of the substantial number of complaints with Capital Connect and the other dealers named in the complaint, ADT sought an injunction.
While Monitronics didn’t take questions about the situation, the company released the following statement: “We have no comment on pending or potential litigation. However, we are confident that our dealers uphold the highest standards of ethical behavior in our industry when it comes to sales tactics. We also believe that all companies can continue to improve upon how all dealers approach potential and existing customers.”
Andrés Correa of Lynn Tillotson Pinker & Cox L.L.P., the law firm representing Capital Connect, one of the five dealers named in the complaint, said Capital Connect was not initially made aware of the specific allegations listed in the complaint, but it did receive the cease-and-desist letter.
“Capital Connect has always had measures in place to make sure these practices don’t happen,” Correa said. “We are always on the lookout for them and do everything we can to make sure [our independent contractors’] interaction with customers is ethical, honest and appropriate.”
Correa outlined the steps Capital Connect implements with its independent contractors to prevent such practices, including: background screenings, training materials that emphasize the damage to reputation from even a single incident, ethics and sales agreements with specific prohibitions against deceptive sales tactics, clearly visible hats and name tags that identify sales people with Capital Connect, quality assurance follow-up phone calls, written acknowledgements that customers sign, and a discipline system to respond to complaints.
“We hire independent contractors,” Correa said. “We take care to make sure they follow the rules, but if we find they are acting outside those rules they are subject to disciplinary action or termination. We intend to prove that our sales reps, as far as we understand, have adhered to Capital Connect’s policies, and if we discover over the course of this investigation that any have engaged in deceptive practices, we will take disciplinary steps.”
Over the past three years, ADT has received nearly $6 million in settlements against companies that have made false or misleading statements while selling security services door-to-door. Additionally, ADT obtained court orders prohibiting the companies from using any further deceptive sales practices.
“Trust is an important part of the value proposition we offer consumers,” said Bleisch. “We want people to know that when they’re dealing with companies to protect their homes, families, businesses and properties they can do so with confidence. These deceptive practices are betraying that trust and putting a dark cloud over the entire industry.”
Bleisch said financial damage extends not just to the companies being targeted, but also to consumers who are being deceived and have not only lost trust in the security industry, but are being forced to pay for unwanted contracts or to return to the company they originally hired.
“As a leader in industry,” Bleisch said of ADT, “we are taking a leading role in protecting the industry’s reputation.”
For more on ADT’s continuing crusade against deceptive practices in the security industry, visit www.SDMmag.com/articles/deceptive-practices-awareness
