As part of the settlement, NorthStar agreed to a $5 million consent judgment if the company defaults on paying the $3 million settlement.
ADT provided evidence from at least 500 customers stating they were victims of deceptive sales tactics from NorthStar employees over the past five years as part of its case.
“Companies that rely on deceptive sales tactics in order to compete damage the reputation and integrity of our industry. As a trusted leader, ADT is committed to stopping fraud at the front door by continuing to pursue legal action against those companies in our industry that intentionally mislead consumers,” says David Smail, ADT executive vice president and chief legal officer.
ADT has sued and prevailed against several security companies that follow deceptive sales business models over the years.
Less than two months ago, a South Florida jury awarded ADT $4 million in damages, including $1 million in punitive damages, in a similar deceptive sales lawsuit against Alder Holdings, another security company headquartered in Utah.
The company asserted that Alder’s sales representatives canvassed neighborhoods in search of homes with ADT yard signs. The salesmen would then claim to represent ADT and dupe the customers into signing contracts with Alder’s competing service.
“We urge consumers to be on the lookout and report suspicious activity during the summer when we see an increase in fraudulent activity,” says Smail.
ADT has an online resource about sales scams in the security industry and tips to prevent falling for them that can be viewed here.
NorthStar provided CE Pro sister publication Security Sales & Integration with the following response:
This settlement resolves nearly four years of litigation between the companies involving historical deceptive sales allegations against one another. NorthStar provided evidence from nearly 100 of its customers stating they were victims of deceptive sales tactics by ADT. The settlement allows NorthStar to move forward and continue to offer superior service to our nationwide customer base.
NorthStar continues its commitment to eliminating deception from the industry, and is pursuing litigation against other companies that engage in deception and victimize its customers. NorthStar prides itself on ensuring the highest internal standards of compliance and business ethics, and protecting its customers from illegal conduct.
This article originally appeared on our sister publication Security Sales & Integration's website.