Washington, D.C. — Problems with home alarm sales tactics were flagged as an issue to watch in the latest report from the annual survey of state and local consumer agencies conducted by Consumer Federation of America (CFA). Forty agencies from twenty-three states participated in the survey, which asked about the most common complaints, the fastest-growing complaints, and the worst complaints received in 2017. In addition, the report identified new kinds of consumer problems, agencies’ greatest achievements, and new laws enacted in the agencies’ jurisdictions last year to protect consumers.
Top Ten Complaints in 2017
These are the complaints most frequently cited as the top problems reported to state and local consumer agencies last year. A new category, Communications, was created this year for complaints about telephone and internet services. Formerly, those complaints were included in Utilities.
- Auto: Misrepresentations in advertising or sales of new and used cars, lemons, faulty repairs, auto leasing, and towing disputes.
- Home Improvement/Construction: Shoddy work, failure to start or complete the job.
- Retail Sales: False advertising and other deceptive practices, defective merchandise, problems with rebates, coupons, gift cards and gift certificates, failure to deliver.
- Credit/Debt: Billing and fee disputes, mortgage modifications and mortgage-related fraud, credit repair, debt relief services, predatory lending, illegal or abusive debt collection tactics.
- Landlord/Tenant: Unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes, illegal eviction tactics.
- Services: Misrepresentations, shoddy work, failure to have required licenses, failure to perform.
- Communications: Misleading offers, installation issues, service problems, billing disputes with phone and internet services.
- Health Products/Services: Misleading claims, unlicensed practitioners, failure to deliver, medical billing issues.
- Household Goods: Misrepresentations, failure to deliver, defective merchandise, faulty repairs, in connection with furniture or appliances.
- (Tie) Home Solicitations: Misrepresentations, abusive sales practices, and failure to deliver in door-to-door, telemarketing or mail solicitations, do-not-call violations; Internet Sales: Misrepresentations or other deceptive practices, failure to deliver online purchases; Travel: Misrepresentations, failure to deliver, cancelation and billing disputes.
First-Hand “Real-World” Consumer Stories
These are some of the stories described in the annual Consumer Complaint Survey Report from CFA. More stories from agencies’ files illustrating consumer problems are featured in the “Real-World Complaints” section of the report, along with tips for consumers.
- A Hole Lot of Nothing: A Massachusetts couple who wanted their home renovated paid a contractor $68,000 and all they had to show for it was a hole in the ground.
- Parts Unknown: A Louisiana woman whose car was at a repair shop for over a year discovered that the owner was selling off parts of the vehicle, instead of getting the parts to fix it.
- Missing Money: An elderly Los Angeles man whose home was foreclosed on asked for help to retrieve the $271,000 he was owed from the sale of the property.
- An Unwittingly Helpful Car Buyer: An Ohio restaurant owner who speaks very little English accompanied an employee to an auto dealership to vouch for his income and ended up unwittingly co-signing the car loan.
- The Malufacturer: A Virginia company operating in Washington D.C. collected $284,000 through crowdfunding to produce athletic apparel, but after more than two years hadn’t delivered a stitch of the clothing it promised to supporters.
- Unwanted House Guests: A Florida woman, complaining about the squalid conditions of the house she was renting, provided photographs showing rats eating the groceries she had just purchased for her three young children.
- Sick Puppy: An Arkansas consumer who recently had brain surgery, purchased a service dog from a breeder without being informed it had serious health problems, including seizures, encephalitis, and a soft spot on its skull.
The state and local consumer that participated in the survey mediate consumer complaints on a broad range of issues, from auto sales to timeshares, and many are empowered to take legal action to stop abuses. “When the car you just bought breaks down or the roofer takes your deposit and disappears, it’s not just an inconvenience,” said Susan Grant, CFA Director of Consumer Protection and Privacy, “it’s a disaster. These problems can cause significant financial and physical hardship for consumers.”
Sunshine on the Solar Industry
In last year’s complaint survey report, solar sales were flagged as an issue to watch. This year’s report provides several examples of solar sales problems, including one concerning community solar energy. The good news is some states have now passed laws requiring specific disclosures for solar sales.
An Alarming Development
This year sales of alarm systems have emerged as an area of particular concern. These complaints involve the use of misleading solicitations and scare tactics. In one case, a company sent a letter that looked like it came from the county government to new homeowners warning that their neighborhoods were unsafe because of “the opioid crisis” and offering “free” alarm systems as part of a county-wide program. Other “alarming” practices that agencies described included false claims that police officers in the area had purchased the same alarm systems, failure to give consumers the opportunity to review their contracts, failure to provide them with copies of the agreements or notify them of their cancelation rights, and locking consumers into long-term, automatically renewing contracts. In some cases companies implied that they were taking over for consumers’ current alarm service when they were not, resulting in the consumers being double-billed. Noting that many of the complainants in these cases are elderly or disabled, Ms. Grant said “Alarm systems are supposed to protect consumers, but consumers need better protection from rogue alarm companies and salespeople who try to take advantage of them.” While states generally regulate alarm companies from a public safety standpoint, the licensing and registration requirements do not address sales practices. Ms. Grant pointed to the Electronic Security Association’s Code of Ethics as a useful reference. “As with solar sales, it might be helpful to have rules for sales of alarm systems requiring clear disclosures, prohibiting misleading and unsubstantiated claims, and providing strong penalties for noncompliance,” Grant said.
The report also provides information from the agencies about new problems consumers reported during the past year, new consumer protections that have been enacted and the greatest achievements of participating consumer agencies. “State and local consumer agencies are always on the lookout for the latest scams, trends that present new challenges to consumer protection, and improvements they can make to operate their agencies more efficiently and effectively,” said Ms. Grant. “It’s good to know we have these cops on the beat to help protect the public.”
To see the full 2017 Consumer Complaint Survey Report go here. In connection with the report, CFA and several of the agencies that participated in the complaint survey have created blogs with practical advice for consumers. From July 31 through October 1, 2018 these blogs and accompanying infographics will be released twice a week, on Mondays and Thursdays. They can be found here.