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ADT Launches Full Offensive vs. Predatory Alarm Companies

At ESX 2014, ADT highlights its $25,000 reward program for identifying security sales scams by holding a press conference with deputy from Tennessee state attorney general, ESA, CSAA and local homeowners association.


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ADT is offering whistleblowers a reward for identifying security sales scams.

ADT is definitely on the offensive. At the Electronic Security Expo (ESX) 2014 last week in Nashville, the giant security and home automation company highlighted its efforts to stop security sales scams with a $25,000 reward for proof of any security company training its sales teams to be deceitful. If the evidence results in a successful prosecution of the offending company, the whistleblower gets the reward.

“ADT’s trusted brand is being exploited by swindlers and scammers who mislead unsuspecting consumers,” says David Bleisch, ADT general counsel. “Victims end up having their ADT security systems unnecessarily replaced and are duped into signing new contracts with another provider.”

As evidence of this alleged duping, Bleisch showed a two-minute sales training tape shot on a phone that ADT reportedly obtained from a whistleblower. In the video, an alarm company sales trainer is talking to his prospective sales team and giving them step-by-step instructions on how to qualify the homeowner as a takeover candidate.

In the tape, the trainer specifically mentions ADT and also claims to be from “GE,” which is a reference to General Electric, the former owners of Interlogix (now owned by United Technologies).

CE Pro could not independently verify the legitimacy of the tape; however, ADT’s chief legal officer David Bleisch as well as other news organizations have identified the source as being from Orem, Utah-based Vision Security. For its part, in a report from local Salt Lake City TV station KUTV, Vision denies using predatory tactics and has even issued a $10,000 reward itself for any information that leads to the prosecution of a Vision employee for misleading sales tactics. In that same KUTV report, Vision notes that ADT was sued last year by the FTC for using paid endorsers as independent reviewers.

“Only 4 percent of scammed clients will ever file a complaint,” says Larry Harrington, chief policy deputy from the Tennessee Attorney General’s Office. He says that many homeowners don’t even realize they have been duped and when they do, they often believe there is no fraud taking place because they have actually signed a contract (usually 5 years) and actual alarm monitoring services are being provided.

LISTEN TO SECURITY SALES & INTEGRATION PODCAST WITH ADT EXPLAINING $25,000 REWARD PROGRAM

“Being skeptical does not mean you are being rude,” says Harrington, referring to often elderly homeowners who do not want to ask an in-home salesperson to leave because they are too polite. “They don’t know that the misconduct should not be misconstrued as a simple business dispute. Many times, the unscrupulous alarm company will put language in the contract that makes it seem that the homeowner can’t fight it,” says Harrington, who says the summertime is when these scams are at their peak.

Among the common deceptive sales practices he cited are:

  • Making misleading statements about the lack of quality of a homeowner’s existing system
  • Starting the installation before the contract is signed
  • Falsely representing themselves as being from the homeowner’s existing alarm company
  • Falsely representing themselves as being from the equipment manufacturer
  • Falsely stating that the existing alarm company is ‘going out of business

ESA Oops Moment?
As part of the press conference, Electronic Security Association (ESA) president John Knox spoke about how the association’s 2,000 members are required to sign a “Code of Ethics” that prohibits them from using predatory sales practices such as these.

“We demand it,” says Knox, who specifically mentioned that the Code has been updated to include this. Ironically, the company that ADT was alleging uses those practices as identified by Bleisch—Vision Security—is a current member of the Electronic Security Association of Utah

Pam Petrow, president of the Central Station Alarm Association (CSAA), also spoke, noting, “Trust is a key element between an alarm company and their customers. This violation of that trust cannot be tolerated.”

Tom Davis, community chairman of the North Murfreesboro Alliance, a homeowners’ association in the Nashville area, also spoke at the press conference. Davis says that at least eight homeowners in the community have fallen prey to the scams. “These are very likable and personable young men,” he says in reference to the alleged scam artists. “In one instance, the salesman arrived at the home at 8 p.m., the contract was signed at 8:35 p.m., and someone was there starting the installation at 9 p.m.”

As part of the scam, Davis says the homeowners are told that that they have a ‘one-month trial period’ on the alarm system, which purposefully is designed to let the homeowner miss the three-day right of rescission clause in the contract. In North Murfreesboro, the city does not have a door-to-door sales license requirement, so there is no municipal resource available for a homeowner to help them.

“There are a lot of bad actors out there,” says Bleisch of ADT, the No. 3 company on the CE Pro 100. “A few bad apples that teach deceptive sales practices hurts the industry’s integrity. That’s why we are fighting. As the largest alarm company, our clients fall prey the most.”

 



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ADT Launches Full Offensive vs. Predatory Alarm Companies


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Article Topics

News · Slideshow · Videos · Home Automation and Control · Security · Legal · Adt · Cepro 100 · · All topics

About the Author

Jason Knott, Editor, CE Pro
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California.

1 Comments (displayed in order by date/time)

Posted by Jason Knott  on  07/21  at  12:27 PM

In response to this article, ESA executive director Merlin Guilbeau addressed the association’s stance on this matter in an op/ed statement to CE Pro.

“ESA did not have an ‘oops moment’, is not a policing agency

“I was somewhat disappointed in the position presented by Jason Knott in his July 1, 2014 article, ADT Launches Full Offensive vs. Predatory Alarm Companies. This article recapped the press conference hosted by ADT during last week’s ESX.

“In the article, Knott entitles one paragraph with the subhead ‘ESA Oops Moment?’.  In it, he quotes Knox as saying “We demand it,” meaning that ESA requires all members to sign their Code of Ethics. Knott then points out that the alleged offender highlighted by ADT is an ESA member. He seems to imply that ESA President John Knox and ESA are hypocrites, requiring that members comply but not enforcing compliance.

:I feel it is necessary to set the record straight.  ESA does require that all members sign the Code of Ethics; and ESA does have a process for investigating offenses that violate our code.  There is a complaint process in place not just for consumers, but for member companies, as well. However, ESA does not serve as a policing agency – we leave the policing to the FTC and state consumer protection agencies.
As stated in the code, the complaint process must be instigated by a member or by a consumer. Specifically:

Compliance
“Members shall implement an effective program for complying with this Code which includes adopting and enforcing appropriate policies and procedures to prevent activities proscribed by this Code. Compliance programs should include (a) requiring compliance with this Code as a material obligation in any written contract for the engagement of any Representative, (b) refusing to purchase or acquire alarm monitoring accounts that were sold or generated using practices prohibited under this Code, (c) conducting effective and ongoing training and education of all Representatives on the requirements of this Code, (d) maintaining processes to effectively collect and investigate complaints alleging violations of this Code, (e) responding promptly to all such complaints and undertaking corrective actions, and (f) enforcing this Code through appropriate internal disciplinary procedures and actions.

Prompt Investigation
“If any consumer alleges that a Representative offering the products or services of a Member has engaged in improper conduct, the Member shall promptly investigate the allegation. If a violation of this Code is identified, the Member shall appropriately discipline the offending Representative, and take further steps, as necessary, to address the consumer’s concerns.

“To imply that we don’t enforce our own code or that we don’t know what’s going on is offensive.  ESA did not have an ‘oops moment’.

“One of the reasons ESA exists is to help make the security industry more professional. We can’t do that by exclusion.  We do it by bringing companies in and encouraging them to be good citizens. We view our role as an opportunity to show members and non-members that we care about the reputation of the industry and the consumers we serve. 

“This is the message we hoped the press conference would convey. Apparently, some didn’t hear it.”

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