Half of the most frequent complaints collected by state and local consumer affairs agencies last year involved, in one way or another, people’s homes. Here are scams to look out for and how to prepare.
Lew Sichelman is a seasoned writer with 50 years of covering the housing and mortgage markets under his belt. His biweekly Inman column publishes on Tuesdays.
Homeowner beware: 5 of the 10 most frequent complaints collected by state and local consumer affairs agencies last year involved, in one way or another, people’s homes.
According to the latest compilation of gripes fielded by 38 offices in 23 states, the Consumer Federation of America (CFA) found that No. 1 on the top 10 list involved automobiles. But second place went to home improvements and construction, including shoddy work and failure to start or complete the job.
One trusting Massachusetts couple complained that they handed over $68,000 to a contractor to renovate their house and still had nothing to show for it, save for a large hole in the ground, according to the 78-page report.
In Pennsylvania, an elderly woman gave an unlicensed contractor $10,000 for roof repairs and interior work. The contractor ripped off the old roof but never returned, leaving the house uninhabitable. Now the property is being foreclosed on because the owner is living elsewhere and can’t afford to hire someone to fix the house and continue to pay her mortgage.
Beefs involving landlords and tenants was the fifth most frequent category. Among other things, tenants complained about unhealthy or unsafe conditions and their landlord’s failure to make repairs or provide promised amenities.
In one case, a Florida woman kvetched about the squalid conditions in her rental house and offered photos showing rats eating the groceries she had just purchased for her three young children. And in Maryland, a tenant was told she must vacate within 14 days because she had violated her lease. But the landlord also demanded a $4,050 “buy-out” fee, even though he was the one terminating the lease.
Indeed, when asked about the worst complaints they take in, consumer agencies named home improvements issues and landlord-tenant cases as the top two. They are particularly onerous because they involve large dollar amounts, because of their impact on vulnerable consumers or because of “the sheer outrageousness of the situation,” the survey report said.
Meanwhile, rounding out the five most frequent complaints involved homeowner’s services, including misrepresentations, shoddy work, failure to have the necessary licenses and failure to perform; household goods, covering misrepresentations, the failure to deliver, defective merchandise and faulty repairs; and home solicitations, including misrepresentations, abusive sales practices and door-to-door telemarketing or mail solicitations that didn’t deliver what was promised.
In a telephone press briefing announcing the survey results, Susan Grant, director of consumer protection and privacy at the Consumer Federation, dwelled on that last category, home solicitations.
Last year’s survey identified door-to-door sales of solar energy products as an issue to watch. Now, this year’s poll has flagged people who go from house to house peddling alarm systems as an up-and-coming issue of particular concern.
Solar sales continue to generate their fair share of complaints about misleading claims, lack of disclosures, faulty installations, and now, sales of community solar power as well as individual systems. The good news is that several states have enacted laws requiring specific disclosures for solar sales.
In Utah, for instance, a new law requires solar retailers to provide a written disclosure to consumers before they enter into a contract to buy or lease a solar system or buy power from a solar system. The disclosure must include the basis on which estimates of savings are made, the obligations of the sellers and consumers and the rights consumers have to cancel.
Several other states, including Florida, New Mexico, Nevada, Colorado, New York and Massachusetts, are considering similar legislation, according to Grant. But there are no such laws covering alarm systems.
Don’t be alarmed, be prepared
Complaints about purveyors of alarm systems run the gamut, but many involve the use of misleading solicitations and scare tactics.
In Cuyahoga County, Ohio, for example, a company sent a letter that looked like it came from the county — complete with the county name and seal — to new homeowners warning that their neighborhoods were unsafe because of “the opioid crisis” and offering “free” alarm systems as part of a county-wide program.
Besides going door-to-door, they often are initiated via telemarketing or direct mail. And they typically lack full disclosure about the costs and terms of the transactions, fail to provide notice of consumers’ cancellation rights and lock consumers into long-term, automatically renewing contracts.
When Cuyahoga County was alerted to the scam by a leery homeowner, the county demanded that the outfit cease and desist. The company complied and agreed to pay the cost of printing and mail a notice to 700-plus consumers informing them that the deal was bogus, Sheryl Harris, director of the county’s consumer affairs department, said during the telephone briefing with reporters.
In Georgia, the attorney general’s office came down hard on a scam that misrepresented itself as being related to the owner’s current alarm company or as taking over the company’s accounts. Some unsuspecting owners found themselves being billed twice, once by the original company and again by the scammers, who were hit with a $500,000 judgement, reported Shawn Conroy, communications and outreach coordinator in the AG’s consumer protection unit.
Other alarming practices — no pun intended — that agencies described in the survey include false claims that police officers in the area had purchased the same alarm systems, failure to give consumers the opportunity to review their contracts, failure to provide them with copies of the agreements or notify them of their cancellation rights and locking consumers into long-term, automatically renewing contracts.
Complaints about alarm system hucksters “have risen to the level that we feel we have to work hard to get the word out,” said Georgia’s Conroy.
Noting that many of the complainants in these cases are elderly or disabled — 5,800, or more than half, the contracts signed in the bogus Georgia case were with seniors or people who were physically or mentally impaired — Grant said “alarm systems are supposed to protect consumers, but consumers need better protection from rogue alarm companies and salespeople who try to take advantage of them. As with solar sales, we need more and better laws.”
According to the CFA, an association of more than 250 nonprofit consumer organizations, while states generally regulate alarm companies from a public safety standpoint, licensing and registration requirements do not address sales practices. The Electronic Security Association has a Code of Ethics, but the best it can do in the way of policing its members is to boot them out if they fail to comply.
Grant said it would be helpful to both consumers and law enforcement and consumer affairs specialists to have rules for sales of alarm systems requiring clear disclosures, prohibiting misleading and unsubstantiated claims and providing strong penalties for noncompliance.
State and local consumer agencies are the backbone of consumer protection in the United States, especially now that the Trump Administration is rolling back rules promulgated by the Consumer Financial Protection Bureau during the Obama years.
Besides education, state and local authorities usually attempt to resolve individual complaints, often through mediation. But many also have the ability to take administrative, civil and/or criminal action to stop illegal practices and obtain restitution for consumers.
In 2017, the agencies responding to the CFA survey fielded more than 908,000 gripes from consumers. And they were able to recover and save consumers more than $2.011 billion through mediation, lawsuits and other actions.
Lew Sichelman’s weekly column, “The Housing Scene,” is syndicated to newspapers throughout the country.