Protection One targets double-selling

Friday, March 1, 2002

TOPEKA, Kan.-Protection One has mailed out more than 700,000 pieces of correspondence to its alarm customers and industry colleagues as part of a campaign to eradicate a security industry scam that has affected thousands of its customers.

Richard Ginsburg, president of Protection One, said the company started noticing a pattern of cancellations about six months ago, where customers reported being told the company had been bought or was going out of business as the reason for their cancellation. Customers said other alarm dealers, claiming that they had bought Protection One or that the company was going out of business, had knocked on their door and duped them into signing
a second monitoring contract.

Many customers discovered they had been scammed only after receiving two monthly monitoring bills or calling Protection One directly to confirm what the dealer had told them. The fraud extended even to company employees, most of whom have Protection One signs in their yards and whom fraudulent dealers visited.

"After we found 100 or 200 of these, we said enough was enough and we launched a pretty aggressive campaign," Ginsburg said.

The campaign has so far included a mailing to more than 600,000 customers,, including a postcard with tips on how to spot this type of fraud, a letter to between 16,000 and 17,000 dealers and others in the security industry, as well as a exhaustive legal campaign.

At press time, Ginsburg said the company had already won settlements, injunctions or judgements against five different companies who had been found to have been defrauding customers; another six to eight cases against companies are currently being carried out, with another dozen or so in the pipeline.

Perpetrators of the fraudulent selling are often former authorized dealers of the company, who are targeting the company's elderly customers, Ginsburg said.

"They are somewhat familiar with the customer and they'll go in and tell them, 'We're here to change your paperwork' or 'We just bought Protection One'there's trust there and they just outright lie to them."

Company officials said although they estimate that the number of affected customers was in the thousands -- cases were spotted mostly in metropolitan areas around the country -- the actual number has been difficult to determine.

"It's a little difficult to pinpoint because sometimes we don't know about it yet," said Robin Lampe, director of corporate communications for Protection One. "We'll find out when they contact their (local Better Business Bureau) or local media and say, 'We're getting double-billed', and we're able to call them and say, 'Here's what's happened and we can help.'"

To help customers who've been "slammed", Protection One created a specific department that's staffed with lawyers and account acquisition experts to bring back to the fold customers who unknowingly signed a second contract or canceled because of rumors of the company being sold or closing its doors. That help sometimes includes good faith credits to customers or negotiations with other alarm business that have already bought an account, Ginsburg said.

"Clearly this has had an impact on attrition, but how much of an impact this has I'll be able to tell you in six or seven months when we do some quarter to quarter comparisons," Ginsburg said. "We're starting to see a slow down (in cancellations due to the fraud) and we are pretty confident that it will stop at some point in time."

Assistance has come from such places as the Mid-South Better Business Bureau, who has had a file on at least one particular group, known as Discount Alarm Services, since 1997. That company has had more than 35 complaints filed against them from customers in the West Tennessee, North Mississippi and Eastern Arkansas area, said John Myers, president of Mid-South. The bulk of the complaints came sometime last year, he said.

"It appears that they had some relationship with Protection One at one time and when they discontinued that, they took the customer list and they say, 'They're going out of business and you need to switch to us,'" Myers said. Discount Alarm Services has targeted customers of other alarm services, as well, he said.

The company has filed suit against the principles of that company, who also do business as Alarm #1 or Alarm One, former Protection One dealers, but a court-ordered injunction against the group has so far gone unheeded, company officials said. Protection One has sought to have the group held in contempt of court, but as of press time the court, the Chancery Court of Tennessee for the Thirtieth Judicial at Memphis, had not yet issued a citation for contempt. The case against the group is still active.

Local media coverage of these fraudulent alarm dealers -- Protection One has had coverage in markets such as Memphis, Wichita, Nashville, Houston and Phoenix -- has put consumers on alert but also highlighted an unsavory but all too uncommon practice in the industry, Ginsburg said.

"I know for a fact that there are dealer programs out there that are funding accounts from people that have already funded then with other people," Ginsburg said. "If they don't think that what's happening to us isn't going to happen to them, they're kind of in the dark, in my opinion. It's hurting the credibility of the business."