Pinnacle Security, an Orem, Utah-based summer-sales-model company, has reached a $76,000 settlement with the state of Missouri over a complaint filed last year regarding alleged deceptive sales practices from a few years back. As part of the consent agreement, Pinnacle has promised to monitor its door-to-door sales reps more closely, according to a recent news release from Missouri Attorney General Chris Koster.
I asked Pinnacle about the settlement, which the AG announced April 20 and here’s what the company had to say:
Pinnacle Security is very pleased that it has resolved the Missouri Attorney General's lawsuit to the parties' mutual satisfaction. Over the last several months, Pinnacle worked cooperatively with the AG's office to address issues related to customer complaints regarding certain alleged sales practices that occurred primarily during the 2008 and 2009 summer sales seasons.
Since 2010, Pinnacle has implemented industry-leading compliance initiatives to help ensure that Pinnacle's customers are treated honestly and fairly. As part of its agreement with the Attorney General's office, Pinnacle will continue to ensure that its Missouri customers receive superior customer care and service. Pinnacle looks forward to continuing its relationship with the State and to protecting the security of Missouri's citizens.
Pinnacle, which sells nationwide and in Canada, said when the company settled a complaint with the Florida attorney general earlier this year that the company had some issues in past years with “rogue” door-knocking sales staff. However, in 2010, Pinnacle made a company cultural shift to emphasize a code of ethics for employees and the implementation of new ways to monitor their behavior and enforce the code.
Here’s more from the AG’ release announcing the agreement:
Under the settlement, Pinnacle will provide $46,000 in refunds to customers in Missouri who were misled about Pinnacle’s relationship with other security companies, the cost of its services, or its cancelation policy. Pinnacle will also pay $12,500 to the Missouri Merchandising Practices Revolving Fund and $17,500 in civil penalties to the state.
Additionally, Pinnacle must reform its sales practices to ensure consumers understand the important terms of the contract before purchasing, including the company with which they are contracting, the monthly price for the service, the total duration of the contract, and any restrictions on cancelation. The settlement, embodied in a consent judgment filed today in St. Louis County Circuit Court, also obligates Pinnacle to monitor its sales representatives who conduct door-to-door sales more closely. ...
The settlement resolves a lawsuit filed in May 2011, in which the Attorney General’s Office alleged that Pinnacle induced consumers to purchase by misrepresenting that they were associated with the consumer’s current alarm company and that the consumer would receive free services when the services were not free. The suit also alleged that consumers were told they could cancel at any time when in fact consumers had to pay for the entire 39-month contract if they did not cancel within three days.
In addition to the $46,000 in restitution, Pinnacle will also pay refunds to any consumer who files a new complaint within the next four months and provides documentation showing they were induced to enter a contract with the defendant using unfair or deceptive practices.