Vivint Loses Appeal in $189M CPI Dispute

A federal appeals court has upheld a jury’s $189.7 million verdict in favor of CPI Security Systems, affirming findings that Vivint Smart Home engaged in widespread deceptive sales practices targeting CPI’s customers.

In a published opinion issued July 22, the U.S. Court of Appeals for the Fourth Circuit rejected Vivint’s appeal in full, concluding that the jury’s award — including $49.7 million in compensatory damages and $140 million in punitive damages — was supported by the evidence and not subject to legal error or miscalculation.

“When a business deliberately engages in widespread unfair competition against one of its rivals over a period of years, the consequences can be expensive,” wrote Judge Paul Niemeyer in the court’s opinion, setting a firm tone that underscored the severity of Vivint’s conduct. 

A Pattern of Deception

The case stems from a 2020 lawsuit filed by Charlotte, N.C.-based CPI, alleging that Vivint sales representatives had misled thousands of CPI customers over several years through door-to-door sales tactics. According to testimony presented at trial, Vivint salespeople falsely claimed that CPI had been acquired by Vivint, was going out of business or that Vivint manufactured CPI’s equipment and needed to perform upgrades.

The misleading claims allegedly caused numerous CPI customers to unknowingly sign contracts with Vivint, leading to confusion, double billing and customer loss for CPI. CPI identified 565 specific customer accounts that switched due to such tactics and, through statistical modeling, estimated the true number exceeded 11,000.

Legal and Financial Impact

A North Carolina jury found Vivint liable for violating the Lanham Act, the North Carolina Unfair and Deceptive Trade Practices Act (UDTPA), and common-law claims including unfair competition and tortious interference. The $49.7 million in compensatory damages encompassed lost profits, harm to brand goodwill, corrective advertising costs and customer service expenses, according to the court’s opinion. The $140 million in punitive damages was found to be consistent with North Carolina’s statutory cap, which limits such awards to three times the amount of compensatory damages.

Vivint challenged the verdict on several grounds, including the sufficiency of the evidence, the calculation of damages and the application of the punitive damages cap. It also argued that CPI’s UDTPA claim was invalid because CPI did not personally rely on the misrepresentations.

The appellate court dismissed that argument, clarifying that CPI’s claim was based on unfair competition — not fraud — and therefore did not require first-party reliance.

Industry Reckoning

The ruling not only highlights the financial risks of deceptive sales tactics but also raises the stakes for similar conduct across the security industry.

Vivint has faced related complaints in the past—from both competitors and regulators. The appellate court noted that 16 state attorneys general had taken enforcement actions against the company over sales misconduct, and that Vivint previously settled a nearly identical lawsuit brought by ADT.

In affirming the judgment, Judge Niemeyer wrote, “Vivint had its day in court, and the two-week trial was essentially a fair one. The jury spoke clearly, based on the evidence.”

Legal columnist and former prosecutor Timothy J. Pastore issued a similar warning in his March 2024 Security Business column, Legal Brief: The Perils of Deceptive Sales. “Sales tactics that prey on the fears of vulnerable customers will not be looked upon favorably by judges or juries,” he cautioned.

That message resonates strongly in the wake of this $189 million verdict. Pastore urges integrators to align sales incentives with legal compliance, particularly in high-pressure competitive environments. Companies that allow misrepresentations, such as falsely claiming affiliation with a rival, implying bankruptcy, or exaggerating upgrade needs, risk severe consequences.

Just as the Fourth Circuit condemned Vivint’s campaign as “widespread unfair competition,” Pastore’s legal analysis reinforces the takeaway: deceptive sales tactics erode trust, damage brands, and invite litigation.

“The reputational and legal damage caused by deceptive practices may take years—and millions of dollars — to repair,” he warned.