New Home Owners: Be Wary of Door-to-Door Salespeople

Man extends his hand to shake on a deal.

Beware of door-to-door salespeople who are targeting wallets via misinformation.

New home buyers, beware. Scurrilous door-to-door salespeople may be targeting you.

Last year, scam artists knocked hard on doors to sell solar roof panels and had state and local consumer affairs agencies on the alert. Now, the hair on the back of officials necks is standing straight up again, this time over scam artists selling alarm systems or saying they have taken over from owners’ current companies.

It is, indeed, an alarming development – no pun intended – especially when they prey on people’s fears with unfounded claims and statistics, according to the Consumer Federation of America’s 2017 Consumer Complaint Survey Report of 38 consumer agencies in 23 states.

Last year’s poll shined a light on solar sales, and they continue to generate complaints about misleading claims, lack of disclosures and faulty installations. These complaints now include sales of community solar power as well as individual systems.

The good news is that several states have enacted laws requiring specific disclosures for solar sales. In Utah, for instance, a new law requires solar retailers to provide a written disclosure to consumers before they enter into a contract to buy or lease a solar system or buy power from a solar system. The disclosure must include the basis on which estimates of savings are made, the obligations of the sellers and consumers and the rights consumers may have to cancel.

But there are no such laws covering alarm systems per se, the sale of which is called out by the current survey as an “issue to watch.”

Complaints about purveyors of alarm system run the gamut, but many involve the use of misleading solicitations and scare tactics. Besides going from door to door, they often are initiated via telemarketing or direct mail. And they typically lack full disclosure about the costs and terms of the transactions, fail to provide notice of consumers’ cancellation rights and lock
consumers into long-term, automatically renewing contracts.

In Cuyahoga County, Ohio, for example, a company sent a letter that looked like it came from the county – complete with the county name and seal – to new homeowners warning that their neighborhoods were unsafe because of “the opioid crisis” and offering “free” alarm systems as part of a county-wide program.

The county sent the company a cease-and-desist letter when it was alerted to the scam by a leery home owner. Surprisingly, the company complied and agreed to pay the cost of printing and mailing a notice to 700-plus consumers that the deal was bogus, according to Sheryl Harris, director of the county’s consumer affairs department.

In Georgia, the attorney general’s office came down hard on an outfit that misrepresented itself as being related to the owner’s current alarm company or as taking over the company’s accounts. Some unsuspecting owners found themselves being billed twice, once by the original company and again by the scammers, who were hit with a $500,000 judgement, reported Shawn Conroy, communications and outreach coordinator in the attorney general’s consumer protection unit

Other “alarming” practices that agencies described in the survey include false claims that police officers in the area had purchased the same alarm systems, failure to give consumers the opportunity to review their contracts, failure to provide them with copies of the agreements or notify them of their cancellation rights, and locking consumers into long-term, automatically renewing contracts.

Complaints about alarm system hucksters “have risen to the level that we feel we have to work hard to get the word out,” said Conroy.

Noting that many of the complainants in these cases are elderly or disabled – 5,800, or more than half, the contracts signed in the bogus Georgia case were with seniors or people who were physically or mentally impaired – Sue Grant, the Consumer Federation’s director of consumer protection and privacy, said, “Alarm systems are supposed to protect consumers, but consumers need better protection from rogue alarm companies and salespeople who try to take advantage of them. As with solar sales, we need more and better laws.”

According to the Consumer Federation, an association of more than 250 nonprofit consumer organizations, while states generally regulate alarm companies from a public safety standpoint, licensing and registration requirements do not address sales practices.

The Electronic Security Association has a Code of Ethics, but the best it can do in the way of policing its members is to boot them out if they fail to comply.

Grant said it would be helpful to both consumers and law enforcement and consumer affairs specialists to have rules for sales of alarm systems requiring clear disclosures, prohibiting misleading and unsubstantiated claims and providing strong penalties for noncompliance.

State and local consumer agencies are the backbone of consumer protection in the United States. Besides education, they usually attempt to resolve individual complaints, often through mediation. But many also have the ability to take administrative, civil and/or criminal action to stop illegal practices and obtain restitution for consumers.

In 2017, the agencies responding to the CFA survey fielded more than 908,000 gripes from consumers. And they were able to recover and save consumers more than $2.011 billion through mediation, lawsuits and other actions.

Homeowners: Be on alert

Unfortunately, home owners also were involved in of at least five of the top ten consumer complains as identified in this year’s survey. So your antenna should always be wiggling; someone may be out to separate you from your money.

Here’s the latest list:

    Auto: Misrepresentations in advertising or sales of new and used cars, lemons, faulty repairs, auto leasing and towing disputes.
    Home Improvement/Construction: Shoddy work, failure to start or complete the job. One Massachusetts couple who wanted their home renovated paid a contractor $68,000 and all they had to show for it was a hole in the ground.
    Retail Sales: False advertising and other deceptive practices, defective merchandise, problems with rebates, coupons, gift cards and gift certificates, failure to deliver.
    Credit/Debt: Billing and fee disputes, mortgage modifications and mortgage-related fraud, credit repair, debt relief services, predatory lending, illegal or abusive debt collection tactics. In one case, an elderly Los Angeles man whose home was foreclosed on sought help to retrieve the $271,000 he was owed from the sale of the property.
    Landlord/Tenant: Unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes, illegal eviction tactics. In Florida, a woman, complaining about the squalid conditions of the house she was renting showed photos of rats eating the groceries she had just purchased for her three young children.
    Services: Misrepresentations, shoddy work, failure to have required licenses, failure to perform.
    Communications: Misleading offers, installation issues, service problems, billing disputes with phone and internet services.
    Health Products/Services: Misleading claims, unlicensed practitioners, failure to deliver, medical billing issues.
    Household Goods: Misrepresentations, failure to deliver, defective merchandise, faulty repairs, in connection with furniture or appliances.
    A Three-Way Tie: Home Solicitations: Misrepresentations, abusive sales practices, and failure to deliver in door-to-door, telemarketing or mail solicitations, do-not-call violations; Internet Sales: Misrepresentations or other deceptive practices, failure to deliver online purchases; Travel: Misrepresentations, failure to deliver, cancellation and billing disputes.

Lew Sichelman is a nationally syndicated housing and real estate columnist. He has covered the real estate beat for more than 50 years.

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