• “Deceptive Sales” Lawsuits in the Alarm Industry - What You Need to Know

Alarm Companies and “Deceptive Sales” Lawsuits: Here’s What You Need to Know

By | 2020-05-22T10:55:36+00:00 April 28th, 2020|Categories: Alarm Installer Insurance Industry News|

For the past several years, we’ve noticed a growing trend toward “deceptive sales” lawsuits in the alarm industry. These lawsuits can often be a tangle, with major providers like ADT suing both smaller partners and larger rivals, states suing installation companies, and a maze of settlements or payouts following the cases. However, the problem comes down to one central crime: Fraudulent alarm installation companies scamming customers, usually door-to-door.

This is not the only industry affected by this issue – it’s been a thorn in the side of the roofing industry for many years, for example. However, with large lawsuits on the rise over the issue, it is important for all alarm installation companies to understand what deceptive sales look like, and how to avoid even the slight appearance of deceptive sales practices. Here are our tips for keeping your company safe.

Be Very Cautious About Door-to-Door Sales

Most deceptive sales lawsuits involve door-to-door sales tactics. This is a very traditional part of the scam, since it makes it easy for the scammer to represent themselves as anything they think will get a sale, as well as make up false claims about the current security of the house (it also helps them get paid in cash from confused homeowners).

This doesn’t mean you have to avoid door-to-door sales entirely, but your company should be incredibly careful how they are carried out. Focus on collecting information and potential leads instead of making a sale. Never try to get access to the house or property: Arrange a future appointment to do this if an estimate is needed for a new project. And do not try to get someone to sign documents in a door-to-door meeting. These are all quite common ploys for scammers that will reflect poorly on your company.

Avoid Pushy Limited-Time Offers

Another frequent tactic that deceptive sales use is a very pushy limited-time offer. Something like, “Your security system is broken, and we can fix it right now for $300, but only if you sign up and pay us right now because our deal is ending today.” The goal is obviously to get money from the owner ASAP without actually doing any work.

Promotions and discounts are an important marketing tool for alarm installation companies, but it is important to avoid being too pushy or demanding immediate action from people. Let them know the terms of the promotion and why it could be a good choice, but don’t try to force a deal, especially in person. When you create a limited-time offer, make it generous enough that new leads won’t feel pressured into signing up for something they don’t really want.

Be Very Clear When Offering Products or Services for Free

Something else that these scammers often try is promising a free alarm system or free service installation, to get a customer to sign a contract. That contract then includes high fees and additional costs that the fraudulent company never mentioned.

Again, this does not mean that you can never offer an additional product or service for free. It does mean you have to be clear what conditions this free offer includes, and what services or purchases are required to qualify for the deal. Be upfront about everything and provide all details behind the offer. Customers should not be confused when trying to understand what they get for free and what they pay for in return.

Cut Out the Scare Tactics

It can be tempting for alarm installation companies to use some scare tactics in their marketing or sales efforts. For example, saying, “Crime in our area has risen 15% in the last three years! You need a security system now!” may sound good, but these scare tactics will look pushy and unfair if they’re ever presented as evidence in a lawsuit. Do not try to scare leads into buying from your company, and don’t hint that bad things might happen to them if they don’t have the right security devices.

Instead, provide any useful statistics in a more passive form on your website and social media. This avoids coming off as threatening and other problems, while still making your point.

Don’t Represent Any Other Brands or Businesses

Many deceptive sales lawsuits also include false representation: Rivals will pretend they are from a different company, often whatever company the owner is already using for security systems. This allows fraudulent companies make “upgrades” or replacements they are not qualified to make, with the assumption of authority they don’t have. Other companies may make it sound like they are a large brand like ADT when they are actually just affiliated with the larger brand, in an effort to increase their own credibility. Avoid both mistakes.

Provide Contact, Certification, and Insurance Data

Always offer your full contact information, your certifications, and your insurance information. Many scammers simply won’t be able to provide this type of authentication, so it’s a great way to build trust while assuring owners.

Final Advice

When in doubt, be honest and don’t lie about anything! Deceptive sales are, well, based on deception – practice authenticity, and your company will benefit while lowering the risk of legal problems. For more advice on lowering your risk and learning more about industry conditions, make sure to check out our other posts!