Home-Security Services: Under Surveillance

More than 10,000 companies in the United States sell home-security-system services. A lack of regulation can lead to unlicensed workers installing systems and inexperienced or unethical salespeople making promises that can’t be kept.

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When Nicki Ketvertis and her husband, Kevin, arrived home from grocery shopping years ago, they found unexpected visitors at their doorstep in Joliet, Ill. Four police cars surrounded their home and a SWAT team kicked in their front door. Their home-security-system-service provider had dispatched a false alarm.

A month later, the Ketvertises received a $225 bill from Joliet for the false alarm. They say it took about a year before their home-security-system service provider paid the bill after Joliet intervened for the couple. 

This incident occurred about 10 years ago, and they since switched home-security-system service providers, but the Ketvertis family suffered a small—and fairly common—hiccup when compared with other consumers.  

• In 2011, a home-security-system service salesperson in Florida was charged with raping a woman after he forced his way into her home after trying to sell her a home-security system.

• In 2012, a man in Canada who purchased a surveillance system for his home was surprised to log into his account to view images of total strangers inside of their homes. His home-security-system service provider sent the wrong video clips to his online account. 

Although these extreme cases are rare, they show the importance of scrutinizing a home-security-system service provider. As many as 13,000 home-security-service companies operate within the United States, according to Laura Stepanek, who is the editor of SDM magazine, which covers the home-security industry.  Consumers Digest looked at the good, the bad and the ugly of these companies to help you to feel more secure when you hire one. 

FEELING SECURE. You don’t have to hire a home-security service to add home-security products to your home, of course. However, a home-security service will monitor your home while you’re away. A “monitoring” contract typically means that you’ll enter a 3- to 5-year agreement at an average cost of $35–$49 per month.

The equipment that you purchase from a home-security-system service provider typically includes contacts, which are mounted to doors or windows to detect when they open, motion detectors, a control panel and a keypad. (Some home-security-system service providers supply the equipment at a discount or free when you sign a monitoring contract.) Should you sign a contract and if a break-in is detected, the home-security-system service provider will call you. A dispatcher will ask you to provide a password and verify that everything is OK—that it’s a false alarm. If you don’t answer the phone or if someone answers the phone but doesn’t provide the correct password, the home-security-system service provider will call the police.

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Stan Martin, who is the executive director of Security Industry Alarm Coalition, which is a trade group for the home-security-services industry, says your home-security-system service provider should contact you within 1 minute after it receives an alarm from your system. The only way that the home-security-system service provider can determine whether it’s a false alarm is by you answering your phone and providing the correct information when prompted. Martin estimates that about 80 percent of all false alarms are caused by user error. This could include, for example, a door not being closed within the appropriate amount of time, forgotten security codes or improper training about the use of the home-security system.

Depending on where you live, your local government might fine you for false alarms. For example, if you live in Los Angeles, the city will charge you $151 for a false alarm and escalate that fee by $50 for each subsequent false alarm. In Roswell, Ga., residents aren’t charged for a first or second false alarm within a year. Subsequent false alarms within the year, however, will result in a $50 fee for each false alarm.

BUYER BEWARE. Chicago resident Veronika Kotlajic knows all about the cost of false alarms. In the past year, Kotlajic had to pay $400 for a third and fourth false alarm that brought the police to her home. She says the problem is her home-security system.

Two years ago, Kotlajic bought a home-security system on the Internet after she found what seemed to be a good deal. She bought a system and  a monitoring contract from ADT. She says she believed that she was buying the equipment from ADT, but that wasn’t the case. She received only a box that contained equipment that she had to install herself. Although the equipment came with instructions, Kotlajic says she had a difficult time installing it herself.

Although Kotlajic’s monitoring contract is with ADT, her purchase was through an authorized dealer of ADT. Matthew Lombardi owns and operates Absolute Security Alarms & Surveillance, which is an authorized dealer for Monitronics Security Systems. His company sells the equipment and service, and performs the installation, he says, but the 3-year monitoring contract goes to Monitronics.

USING PROTECTION. A home-security-system service provider should have installers who are licensed and trained professionals and have the proper identification on hand when they come to your home to install a system.

USING PROTECTION. A home-security-system service provider should have installers who are licensed and trained professionals and have the proper identification on hand when they come to your home to install a system.

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Lombardi and Martin don’t recommend buying a home-security system from a dealer that must be installed by a consumer, because a consumer might not install it properly.

The proper placement of motion detectors, for example, is critical to avoiding false alarms, Martin says. Standard motion detectors detect motion through heat. A trained technician would know not to place them facing a heat source, such as a fireplace, a vent or an open window, Martin says. A seasoned installation technician can take anywhere from 3 to 12 hours to install a system, depending on the complexity and size of the system, Lombardi says.
Lombardi says an installation technician should undergo at least 250 hours of training, provided by his/her company, and at least another 6 months of full-time, on-the-job training to become a decent installer. Home-security-system service providers also should provide their technicians with further training as their technology evolves. L.J. Lynes of Electronic Security Association (ESA), which is a trade association that represents the home-security industry, says each home-security-system service provider trains employees differently. You should ask any home-security-system service provider about its training programs, he says. 

DECEPTIVE PRACTICES. Adequate professional training means that you have a better chance of getting good service from a home-security-system service provider. Based on the number of state legal actions against these providers in the past 3 years, some companies are better at training its company representatives than are others. 

In October 2012, Pinnacle Security was fined $1 million and received a 2-year ban on new sales in Illinois for what Illinois says were “unfair and deceptive” sales practices and for using unlicensed sales representatives.

Pinnacle hired people who had been convicted of felonies that included robbery, assault and aggravated sexual abuse, according to Illinois Department of Financial and Professional Regulation (DFPR). Even mere charges of that nature would have been sufficient for the state to deny a license—if the workers actually applied. Sue Hofer, who is a spokesperson for DFPR, says her department’s investigation unveiled that 700 of Pinnacle’s 1,100 employees weren’t licensed by the state.

Furthermore, Pinnacle’s employees were found to have made misleading statements when they went door to door to sell their home-security system to homeowners who already had one. Basically, they told consumers that their home-security-system service provider had gone out of business and that Pinnacle was taking over the account, and they asked them to a sign a new contract, Hofer says. Customers discovered the scam when they were billed by two companies for the same service.

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“We have seen complaints about unlicensed employees. We have seen conflicting information about the product line and questions whether they are telling their customers the truth,” Hofer says. “All those things have been investigated in the past but not with one company.” She says the Pinnacle case was by far the worst that the department has seen.

Illinois wasn’t alone in disciplining Pinnacle. In March 2012, Pinnacle reached a $125,000 settlement with Florida after the state filed a lawsuit that alleged unfair and deceptive practices. (Unlicensed employees weren’t an issue in this case.) Pinnacle was accused of misleading consumers, many of whom were senior citizens, about its relationship with other home-security-system service providers and the cost of its service.

According to the settlement, Pinnacle agreed to improve its business practices and make refunds to consumers for the cost of the security system that it installed, pay termination fees that were charged by a consumer’s original home-security-system service provider and pick up the cost of reinstalling the previous service’s equipment.

After its settlement with Illinois, Pinnacle said the problems were in the past, and it had implemented what it called “industry-leading compliance initiatives” to ensure that all sales representatives met licensing requirements. Pinnacle failed to respond to our three phone calls and two email requests to explain what specifically was being done to prevent problems from happening again.

(Hofer says part of Illinois’ settlement with Pinnacle includes a state review of employee-training materials but couldn’t say what—if anything—Pinnacle was doing at the corporate level to improve its practices.)

Unfortunately, Pinnacle isn’t the only home-security-system service provider that’s been accused of unethical behavior. In 2012, Ohio sued Platinum Protection after the state attorney general’s office received 30 consumer complaints against the company since 2007. Complaints included the alleged misrepresentation of the cost of system installation and monthly monitoring, and the duration of the monitoring contract, according to the lawsuit.

According to Ohio, consumer losses ranged from $40 to $2,200. The case was pending at press time.

Also in 2012, Vivint Security sued a competitor, Elite Security Systems, which is an ADT authorized dealer that’s based in Utah. In the lawsuit, Vivint accuses Elite of “slamming” Vivint customers in California and Florida. Slamming is the practice whereby sales representatives of one home-security-system service provider sign consumers to a new service contract, while a valid contract exists with another service, under false pretenses. In Vivint’s lawsuit, which is pending, it accuses Elite sales representatives of using deception by telling Vivint customers that Elite had “bought out” or was “taking over” Vivint accounts and having them sign a new contract.

PUT IN CHECK. Not all states require home-security-system service employees to be licensed. According to ESA, 39 states plus the District of Columbia require employees to have a license, and 14 of those require employees to take training classes. Lynes says a typical amount of state training is a 24-hour, 3-day class for sales representatives and technicians. They also have to complete a written exam to be licensed.

The 11 states that don’t license home-security-system service employees still require employees to have a background check, ESA says. But in a state where a license isn’t required, it’s up to the company to run the background check, Lynes says.

ADT, for example, requires all employees to undergo a criminal-background check and a drug test, according to Sarah Cohn, who is a spokesperson for ADT. In addition, all door-to-door sales representatives must wear company-branded clothes and show a company identification card, she says.

Further, ADT requires its authorized dealers to have their employees undergo a criminal-background check, Cohn says. ADT can’t police each company, Cohn says, but if ADT discovers that an authorized dealer doesn’t adhere to its agreement with ADT, ADT will cut off its partnership with that dealer. Cohn says ADT has severed ties with dealers for failure to comply with its guidelines regarding hiring or other practices.

Not all home-security-system service providers use authorized dealers. Vivint instead uses what it calls “channel partners,” says Megan Harrick of Vivient. That means that another company might advertise Vivint service, but if a consumer were to contact that company, the sales lead would be turned over automatically to a Vivint employee, she says.

All sales and installation for Vivint’s home-security-system service are done in-house, she says. Vivint follows the same code of dress as ADT does, and all employees, including any sales representatives, are required to have identification on hand to prove their affiliation with the company.

Steve Dixon of Vivint says all of the company’s sales representatives and technicians also undergo a criminal- background check in the county and state where the person resides. Some states also might require a background check with FBI. We believe that this is a good step, because the FBI background check might find a criminal record for a person in a different state in which he/she lives. A state check will find only crimes that were committed in that particular state.

THE HEAT IS ON. In general, door-to-door sales of home-security-system service providers, increase in the spring and summer months. According to Federal Trade Commission, home-security-system service providers often hire people to make unsolicited calls to homeowners during this time.

Lombardi and Gene Riddlebaugh, who is president of National Alarm Association of America, which is a trade organization that represents home-security-system service providers, say summer selling programs are common in the industry. How it works: A home-security-system service provider will identify a particular region that it wants to penetrate, hires sales representatives to blanket the region and gives them a crash course in what they’ll sell. The sales representatives’ job is to make as many door-to-door sales as possible. Besides money, the sales representatives might have other incentives, such as paid vacations, to hit the company’s quota at the end of the summer. Lombardi says some sales representatives can make around $40,000 during a summer.

Such sales programs aren’t necessarily unethical, but you should know that during those months, you most likely aren’t dealing with a seasoned professional who has worked at a company for years and has extensive knowledge of his/her company’s products. In many cases, the sales representative might be a college student, Lombardi says.

“They only teach them what they’re selling, and it’s up to the [consumer] to ask the right questions,” Lombardi says.

Herrick says Vivint hires roughly 2,100 seasonal sales representatives. Some are college students, but others have made it into a full-time seasonal career, which means that they return every summer, she says. However, she says, all of the seasonal sales representatives are required to undergo extensive training.

Regardless of who is doing the selling, you should make sure that any promises that the salesperson made are included in a written contract before you sign on the dotted line, according to FTC. It’s best to go over the contract with the sales representative to keep an eye out for any issues that have to be addressed, such as any subsequent rate increases, which can be large after a low introductory rate; or early-termination fees.

A home-security-system service can be a worthwhile investment for consumers who want an extra level of protection for their lives and property.

However, you have to be on your toes to prevent a home-security-system service provider from becoming an unwelcome guest.

Kat Zeman has 15 years of experience writing for the Daily Herald, as well as serving as a managing editor for Insure.com.

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