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Mark A. Peterson

Pinnacle Security fined more than $500,000

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Monday, February 4, 2013

Summer-model Pinnacle Security is getting a fresh start after traditional-model home security giant Protection 1 recently purchased select assets from the company.

The deal has great potential, according to an alarm company owner who has married both models.

But it appears that problems from Pinnacle’s past continue to dog it. According to news reports, the Utah-based company now has to pay $525,000 as the result of a lawsuit filed by California’s Contra Costa County, charging Pinnacle with deceptive business practices.

It's not the first time Pinnacle has been sued over such issues.

Over the years the company has been accused in a number of states of deceptive sales practices. Last fall, for example, Pinnacle agreed to pay a $1 million fine in a settlement with the state of Illinois for such alleged violations as “slamming” customers and even hiring felons as sales reps.

According to a news report, the following information was released from the office of Contra Costa County District Attorney Mark A. Peterson. It said that the civil judgment against Pinnacle, in addition to the payment of penalties and costs:

 

o    Requires Pinnacle’s sales representatives to refrain from making false and misleading statements during the door- to-door sales presentations.
o    Prohibits Pinnacle sales representatives from telling consumers that they will get free or discounted products or services if they allow a Pinnacle sign to be placed in their yard.
o    Prohibits Pinnacle sales representatives from telling consumers that sales representatives are engaging in “seed marketing, advertising, marketing, or increasing Pinnacle’s visibility in the neighborhood”.
o    Requires that Pinnacle sales representatives comply with section 17500.3 of the Business and Professions Code by immediately verbally identifying themselves, who they work for, and what they are selling.
o    Requires that Pinnacle use contracts that comply with California’s Unruh Act and federal regulation Z pertaining to retail installment contracts by disclosing, among other things, the total price of the alarm monitoring service for the initial contract term of years.
o    Requires that Pinnacle use Spanish language contracts for customers to whom the sales presentation was made primarily in Spanish.
o    Requires that whenever a sale is made to a customer who already has monitoring equipment installed by another monitoring service provider, that Pinnacle shall not remove that customer’s existing monitoring equipment until such time as the three-day cancellation period (applicable to door-to-door residential sales) has expired.
o    Puts limits on the amount of contract termination fees that can be charged to customers.
o    Requires the payment of restitution to certain customers; and
o    Requires that Pinnacle adopt specified provisions to monitor the future conduct of their sales representatives.

 

ADT runs afoul of California law

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Wednesday, February 1, 2012

ADT has agreed to pay almost $1 million to settle a civil lawsuit brought by the district attorney of California’s Contra Costa County over contracts ADT had with residential customers in which it reserved the right to hike monthly fees after the first year. That violated a California law requiring residential consumers get written disclosure of all costs upfront, according to the state.

District Attorney Mark A. Peterson, who announced the settlement this week, said that under the agreement, ADT has said it will follow the law for future contracts and, in addition to a $950,000 civil fine, will pay restitution to some customers whose monthly rate increased during their initial contract term.

Here’s a more detailed account from the Contra Costa Times on the settlement:

A national alarm company agreed to pay a $950,000 civil penalty and provide restitution to some customers to settle a lawsuit by the Contra Costa District Attorney's Office, which claimed certain contractual terms imposed upon customers violated California law.

District Attorney Mark Peterson announced the settlement Monday with Florida-based ADT Security Services, Inc., which sells home burglar and fire alarm systems.

ADT required customers to enter into two- or three-year contracts, in which the company reserved the right to raise monthly fees after the first year. The lawsuit alleged that by failing to advise customers how much the rate increase would be, ADT violated contract disclosure requirements in California's Unruh Act.

The lawsuit further alleged that termination fees for customers who discontinue ADT service could exceed the remaining balance of a contract obligation.

Under the terms of the settlement, ADT will conform its future California contracts to the requirements of Unruh Act, which requires written disclosure to residential consumers of contract terms. In ADT's case, that includes the total price for monitoring services for the initial term of the contract, disclosure of the number of required payments during that term, and disclosure of the amount of each monthly payment.