Industry associations warn against deceptive sales practices

Presentation seems timely ahead of the summer sales season
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Wednesday, May 10, 2017

SACRAMENTO, Calif.—The Better Business Bureau, the Electronic Security Association, The Monitoring Association, and ADT—as well as targets and victims of deceptive sales practices—gathered here on May 9 to discuss the harm these sales techniques do to customers as well as the industry.

“In 2016, over half a million consumers nationwide turned to BBB to look up information about home security companies, but they also came to us to complain,” Lynn Conner, interim president and CEO, of the BBB Serving Northeast Calif., said in the presentation. “Of the 3,500 business categories we tracked in 2016, home security sales ranked in the top 25 for the most number of complaints."

Conner highlighted common tactics used by deceptive salespeople, such as falsely appearing to be from a consumers current alarm company or fraudulently claiming that the consumer’s alarm company is going out of business and offering a free upgrade.

“The higher complaint ranking indicates that consumers are not asking enough questions, nor doing their homework. Also, it tells us there are some bad apples in the industry,” Conner said. She noted that the BBB has given a C rating or below to almost 160 home security companies. “The good news is that’s only a fraction of the approximately 12,000 security companies in the United States.”

Conner discussed what could drive sales reps to engage in deceptive practices. “By some accounts, a sales rep can make about $1,500 for each contract they convert to their company. That means if a dishonest sales rep knocks on 100 doors a day, and can deceive at least one consumer, he or she can make $45,000 for just 30 days of work,” she said.

More than 1,100 alarm companies are BBB accredited. Conner gave several pieces of advice to consumers encountering door-to-door salespeople: “Think of your safety first. Always remember, you don’t have to invite a salesperson into your home. Ask for identification; salespeople should be able to provide proof that they actually work for the company they claim to represent.”

Of all victims of deceptive alarm sales, only 4 percent will complain, Conner said. “Most consumers who fall victim to fraud either don’t know they’ve been ripped off, or they know it but may feel helpless.”

Jay Hauhn, executive director and CEO for The Monitoring Association, said, “We’re making progress and our message is getting out and events like the one today clearly help. Also, companies like ADT and Protection 1 are leading that way through fighting deceptive sales through legal action.”

Hauhn also described how these practices affect the entire security industry. “We are in the life safety business. Credibility is incredibly important. When that sacred trust with customers, placed in us, is violated, even by a small band of bad actors, we all suffer.”

ESA’s executive director and CEO Merlin Guilbeau said, “ESA recognizes that 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 that we expect our members to adhere to.”

Guilbeau continued, “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. The code suggests that they respect the customer and that they be honest at all times and represent their company and their services truthfully.”

Consumers can access this code of conduct at Alarm.org, Guilbeau noted, along with resources that cover security, crime prevention, and choosing an alarm company. “Our role is to educate not only our members, but consumers as well,” he said.

Guilbeau added that he hopes ESA member companies and consumers will file a complaint if they witness an ESA member engaging in deceptive sales practices.

There is a difference between deceptive sales and legitimate door-knocking. “Door-to-door selling is a very effective tool, practiced for decades throughout the United States; but, it needs to be practiced the right way—with honesty and integrity. There are many businesses that use this model that have high BBB ratings,” he said. 

“While ESA is a leader in the fight against deceptive sales, and takes this issue very seriously, I want to highlight all the good that our members do each and every day. … Security professionals install and monitor systems that deter burglaries every day.”

The event highlighted three ADT customers who had been either scammed or targeted through unscrupulous sales practices. Following the presentation, Bob Tucker, ADT public relations director, said that it wasn’t difficult to find participants. “We keep pretty good records of this kind of thing. Once I told them that they would have an opportunity that would share their story that could help educate and enlighten others—so they don’t fall victim too—they gladly volunteered their time to come today,” he told Security Systems News.

Marie Marshall, a scam victim from Sacramento, Calif., shared her story first. A salesperson, identifying himself as Mike, told her she needed a new keypad and there would be a change in the billing for her alarm system. “I asked Mike if it was the same company, and he replied ‘yes,’” Marshall said.

Marshall found out weeks later, after signing a contract, that Mike’s company was not affiliated with her alarm company, ADT. She eventually had to cancel her ADT service because she couldn’t afford both services.

Mike Profumo, a scam target and resident of Carmichael, Calif., had a sales rep discuss several matters pertaining to ADT. "He gave me the impression that he represented ADT,” he said. The salesperson claimed he now had a wireless system, and Profumo pointed out that his system was already wireless. Profumo became suspicious when the salesperson made other false claims about the system and asked him to leave.

Bill McCullough, a scam victim from North Highlands, Calif., was told by a deceptive salesperson that ADT was moving out of his area. When McCullough attempted to contact his local ADT dealer and couldn’t at that time, he believed the salesperson. “We signed a contract and he installed [a system] the following day,” he said. McCullough eventually got his money back.

ADT has been hosting educational events focused on deceptive sales since 2010, when ESA officially re-launched its Code of Ethical Conduct.