Cuomo, home security company resolve suit

Keith Loria Aug. 12, 2010, 5:59pm


NEW YORK (Legal Newsline) - New York Attorney General Andrew Cuomo announced on Thursday that he has settled with a Utah-based home security company that allegedly tricked homeowners into signing contracts.

Pinnacle Security Group allegedly used deceptive door-to-door sales tactics to get New York homeowners to sign contracts for security services they didn't need.

Under terms of the agreement, Pinnacle must provide restitution to the 4,000 New York customers that have signed with the company since 2008, pay a $150,000 penalty and reform its sales practices for future business.

"Pinnacle used dirty tricks and deception to pressure New Yorkers who were simply trying to ensure the security of their homes," Cuomo said. "This settlement holds Pinnacle accountable for their actions and makes fundamental reforms to the company to prevent such fraud from happening again."

Cuomo alleges that Pinnacle often directed its sales staff towards homeowners who had existing contracts with other security companies, using a practice known as "slamming" to convince people to switch to their company.

Slamming involves providing false representations, such as telling people that their existing company went out of business, had merged with Pinnacle or was affiliated with them in some way.

Cuomo further alleged that the company called homeowners, misinforming them that their existing contracts were canceled and misrepresenting the actual terms and costs of their contracts, often changing contract terms once customers signed on.

Pinnacle also allegedly didn't train and monitor its sales force properly and failed to respond promptly and adequately to consumer complaints.

Pinnacle must pay $150,000 to New York State for penalties, costs and fees associated with the litigation.

As a result of the settlement, Pinnacle must implement enhanced procedures to oversee its sales force and all contracts must provide clear disclosures to consumers about their security terms. Pinnacle must also hire a third-party administrator to handle claims of restitution.

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