CPI-Vivint Verdict Seen as Industry Turning Point for Door-to-Door Sales Ethics

This week’s appellate court ruling affirming a $189 million judgment in favor of CPI Security Systems against Vivint Smart Home is being viewed as a pivotal moment for the electronic security industry, particularly in how companies approach door-to-door sales and customer acquisition practices.

Timothy J. Pastore, a former federal prosecutor and “Legal Brief” columnist for Security Business magazine, said the Fourth Circuit’s decision is a strong message to the broader electronic security industry.

“The electronic security industry is on notice that the use of deception to acquire customer accounts may have severe consequences,” Pastore said. “Here, the punitive damages were more substantial than the direct and consequential damages combined. That sends a loud and clear message that the jury and now an appellate court will not tolerate dishonest sales tactics.”

Pastore emphasized that companies need to balance growth targets with legal and ethical oversight.

“Security firms must invest in training for their sales staff — instructing them of the perils of deceptive sales practices,” he said. “While short-term gain may be achieved by poaching customers, the long-term consequences can be significant — as Vivint has painfully learned.”

A turning point for door-to-door sales?

Kirk MacDowell, founder of MacGuard Security Advisors and a longtime security industry executive, believes the verdict could be a defining moment in the evolution — or potential decline — of door-to-door selling.

“This ruling will significantly impact the door-to-door sales approach,” he said. “In some cases, dealers will abandon this sales approach altogether.”

MacDowell noted that even before the court decision, many jurisdictions had been clamping down on door-to-door solicitation with stricter ordinances, making it a less attractive channel for integrators. For companies that continue using it, he said, the bar for compliance just got higher.

“Companies that continue to sell door-to-door must take a much stronger leadership role with strict compliance rules and guidelines,” he said.

Compliance starts at the top

Both Pastore and MacDowell agreed that enforcement and oversight must begin with executive leadership and become embedded in company culture.

“Ethical behavior should permeate the entire organization, and it starts with the CEO,” said MacDowell. “Employees that lie, tell tall tales or half-truths should be terminated immediately.”

He also recommended assigning supervisors in close ratios — ideally one for every five or six field reps — and having every salesperson sign agreements that define ethical boundaries and the consequences for crossing them.

Pastore echoed the call for greater internal vigilance.

“The issue is whether owners, executives, legal counsel and others in leadership positions will monitor their company’s sales practices to ensure that they do not cross the line and risk significant liability,” he said. “Play by the rules — or learn the hard way that you should have.”

Vivint responds

Reached for comment, a Vivint spokesperson said the company is focused on the present and noted that the claims at issue stem from prior leadership.

“While we acknowledge the Court’s ruling, it’s important to note that many of the allegations occurred over a decade ago under prior ownership,” Vivint said in a statement.  “Today, we are focused on serving more than two million customers across the U.S., enabling them to live in smarter, safer homes.”

What happens next?

Although the court’s decision is specific to North Carolina law, Pastore said the legal principles and compliance risks are broadly relevant across the country. Still, he doesn’t expect sales aggressiveness to disappear overnight.

“I expect that sales organizations will continue aggressively to generate new business and acquire new accounts,” he said. “The question is whether they’ll do so responsibly.”

MacDowell sees the verdict as more than a cautionary tale; he sees it as a reckoning.

“I do see this as the turning point for the industry regarding door-to-door sales,” he said. “CPI did the industry a great service by sticking with this litigation. The Wild West days of unethical sales have already begun to fade, and this case may accelerate that process.”