Vivint takes door-knocking rival to court

PROVO, Utah—Vivint is suing another door-knocking company, alleging it has been using false and misleading statements to “slam” or take over Vivint customers.

Vivint, based here, filed a lawsuit against Elite Security Systems, an authorized ADT dealer based in Orem, Utah, in Utah state court in June. The case was removed last month to federal court in Utah.

Vivint, one the nation's leading home automation, home security providers, claims in its lawsuit that Elite “used deceptive and false practices” to get Vivint customers to sign up with Elite. Using deception to switch customers from one competitor to another is known as “slamming.”

Vivint seeks damages of more than $300,000 and a preliminary injunction against Elite barring it from targeting Vivint customers.

In the lawsuit, Vivint cites 22 instances of alleged deceptive practices, which it said occurred between February 2011 and May of this year in states that ranged from California to Florida. Vivint claims Elite sales reps made false statements to Vivint customers that included saying that Elite and/or ADT had “bought out” or was “taking over” Vivint, and that Elite and/or ADT were “sister companies” with Vivint.

Elite—which denies Vivint's allegations and wants the case dismissed—provides sales, service and installation in numerous states nationwide, according to court documents and Elite's web site.

It's not unusual for companies that sell security systems door to door to be accused of using unfair sales practices. Vivint itself has faced such allegations.

For example, Brink's Home Security in 2006 sued APX Alarm Security Solutions—Vivint's name before it rebranded last year—for $900,000, alleging APX used improper sales practices to steal 47 accounts. APX countersued, claiming Brink's was engaged in unfair practices. The two companies settled in 2008.

Between 2009 and 2011, attorneys general in Arkansas, California and Oregon took government action against Vivint or APX, with those cases resolved either “through a final decision or settlement,” according to the Better Business Bureau of North Alabama, which said it has received complaints about Vivint sales reps using aggressive sales tactics.

Also, CPI Security Systems, a North Carolina-based security monitoring company, claimed this summer in a local television news report that Vivint used deceptive sales tactics to steal customers from CPI. Vivint has denied the charge.

But Vivint's lawsuit this summer against Elite stands out because it's a complaint brought by one door-knocking company against another.

Vivint declined to discuss the case with Security Systems News, saying the company does not comment on pending litigation.

Elite also has a policy of not commenting on ongoing litigation, the company's technical director, Matthew Zupancic, told SSN in an email communication.

However, he added, “Elite supports the ESA's Code of Ethics and endeavors to conduct its business consistent with the highest standards of integrity. It requires its sales force to do the same. If Elite learns that deceptive sales practices have resulted in a new alarm account, Elite takes immediate action to remedy the situation.� Elite wants not just new business, but good business.”

Elite argues in court documents that it isn't legally liable for the approximately 250 sales reps it contracts with per season because they are independent contractors, not its employees. However, the company said it trains the reps to follow an ethics code and disciplines them if they don't. Elite contends some of the sales staff that Vivint names in the lawsuit never worked for Elite and that some of the alleged incidents took places in states where Elite doesn't sell and with customers it has no record of.

Whether a company is responsible for contract employees is a legal question that's arisen before. In 2009, ADT and Monitronics filed suit against the salespeople themselves over complaints about unethical sales practices rather than the companies who employed them.

For its part, Vivint in this lawsuit argues that “Elites sales representatives function as employees because of the level of control Elite retains and exercises over their work.”