Alarm firms reach $500K settlement with Georgia AG over use of deceptive sales tactics

Oct. 30, 2017
Alder Holdings, Alarm Protection Georgia also required to pay restitution to affected consumers

Georgia Attorney General Chris Carr announced last week that his office has reached a $500,000 settlement with Alarm Protection Georgia, LLC, and Utah-based Alder Holdings, for allegedly engaging in deceptive sales practices across the state.

“Our investigation revealed that these companies had obtained at least 5,812 contracts from Georgia consumers, an astounding 60 percent of which were obtained from elderly and disabled consumers,” Carr said in a statement. “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.”

The initial complaint filed against the companies alleged that they made false representations to induce consumers into entering into long-term contracts with Alder. Among some of the deceptive tactics reportedly used by the companies’ sales reps included:

  • Representing that they were employed by or partnered with a consumer’s existing security company and that they were there to “upgrade” the consumer’s service;
  • Representing that the consumer’s existing monitoring company was no longer in business or that they were taking over for that company;
  • And, representing that the level of criminal activity in the consumer’s neighborhood had increased and that the sales representative has been referred by law enforcement officers who live in the consumer’s neighborhood and/or that police officers living in the area had recently purchased the same alarm system from the companies.

The companies’ Georgia regional sales manager was arrested in August, 2015 and subsequently indicted in February, 2017 in Laurens County, Ga., on three counts of exploitation and intimidation of an elder person.  Other sales representatives posted pictures of elderly consumers on their personal social media accounts and posted comments about the consumers’ mental state.

The complaint alleges that beginning in 2016, the companies started using electronic contracts in a further attempt to deceive consumers. According to the complaint, consumers who were asked to sign an electronic contract were frequently handed an electronic device with only a signature page appearing. Consumers claim they were not required and/or permitted to scroll through each page of the electronic contract before consenting to execute the contract, and often did not have email addresses, computers, devices or printers that would allow them to receive, view and/or print electronic documents.

The complaint also alleges that these companies willfully and blatantly violated numerous consumer protection laws requiring door-to-door sales companies to provide consumers with copies of contracts they sign and to clearly inform consumers verbally and in writing that they have three business days to cancel the contract. 

Other terms of the settlement include:

  • A permanent injunction prohibiting the companies from engaging in acts and practices that violate Georgia’s Fair Business Practices Act.
  • A judgment against the companies in the amount of $500,000.00 for civil penalties and costs of litigation.
  • A requirement that the companies must provide restitution and other relief to specified consumers including reimbursement of contract payments and other fees, cancellation of contracts, forgiveness of defaulted contract balances and reversal of negative credit reporting.
  • A requirement that the companies must notify consumers, in writing, of automatic renewal provisions contained in contracts.
  • An 18-month monitoring period during which the companies must provide additional consumer remedies as directed by the state.