Georgia Attorney General Chris Carr has reached a $500,000 settlement with a Utah-based home alarm company and local subsidiary after accusing the company of violating consumer protection laws and of targeting elderly consumers with high-pressure, deceptive tactics.
In a complaint filed in Fulton County Superior Court, Alder Holdings and Alarm Protection Georgia are accused of failing to provide customers with cancellation forms required under Georgia’s “Cooling-Off Rule,” under which consumers have three days to cancel such contracts.
Sales representatives working door-to-door earn 40 percent to 50 percent of every monthly payment a customer makes for the length of the contract, five years or more, according to the complaint. They don’t make anything if a consumer cancels within the cooling-off period.
Sales reps “blatantly ignore state laws and local ordinances and do whatever they want and whatever is necessary to deceive and strong-arm consumers” into signing five-year contracts, according to the complaint. That included masquerading as employers from the target’s existing service provider to say the existing company is no longer in business, warning of high criminal activity in the neighborhood and representing that they were referred by a law enforcement officer living nearby.
Between 2014 and 2016, at least 5,812 contracts were signed in Georgia, according to the complaint. Citizens 60 and older, who make up less than 20 percent of the state’s population, represented an “astounding” 60 percent of the contracts sold in that period. Consumers 90 and older were 2 percent.
Some sales reps bragged and joked about taking advantage of the elderly and mentally infirm, it said. In 2014, two Alder salesmen “posted photos of elderly consumers in public posts on Instagram and made comments regarding their mental capacity,” according to the complaint. “One sales representative commented that it ‘took forever to qualify, she couldn’t remember her own birthday. On top of that she insisted that I was her son the whole time, weird right?”
Under the Cooling-Off Rule, mandatory language in the notices of cancellation informing consumers of their three-day, no-penalty right to decline by mail was replaced with language saying only certified or “statutory overnight delivery” would be accepted and warned $25 in “liquidated damages” and a $5 pickup fee might apply.
In addition to the $500,000 to be paid in installments between now and March 2019, the companies agreed to abide by Georgia’s Fair Business Practices Act, offer cancellation and restitution to 90 customers listed in the agreement, reimburse all customers who were charged for canceling their contracts during the three-day cooling-off period and forgive any contract balances for customers who have defaulted on their payments among other stipulations.
“This case should serve as a warning for scammers looking to defraud Georgia consumers, especially our older, at-risk adults who are one of our state’s most vulnerable populations. We have their backs, and we will not tolerate this type of behavior in Georgia,” said Attorney General Chris Carr in a statement announcing the settlement.
The companies are represented by David Stewart and Kenneth Crowder of Augusta’s Crowder Stewart. In an email, Stewart said the “compromise with Georgia’s Consumer Protection Unit … avoided significant expense, inconvenience, and uncertainty. Resolving this matter without any finding of wrongdoing allows our clients to devote their resources to providing superior service and products to their customers.”