Vivint reaches $20M settlement with FTC over allegations of fraudulent use of credit reports

This isn’t the first time the company’s salespeople have been accused of deceptive conduct.

Utah home security company Vivint Smart Home Inc. has agreed to pay $20 million as part of a settlement with the Federal Trade Commission after allegedly using credit reports fraudulently to help unqualified customers obtain financing for its products.

An FTC news release says Vivint’s door-to-door sales representatives would help customers qualify for loans by finding another consumer on the White Pages app with a similar-sounding name and using that unwitting person’s credit history in the application process. The sales representatives would also allegedly ask customers for the name of someone they knew who had better credit history, and then they would add that person as a co-signer to the account without their permission.

If customers qualified through these “deceptive tactics” defaulted on their loans, the FTC release states, Vivint would allegedly refer the co-signee to its debt buyer. This meant that person’s credit might suffer, or they might be targeted for debt collection, for a loan they never consented to signing up for.

“Vivint’s sales staff stole people’s personal information to approve others for loans,” said Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection, in the release. “For misusing consumer credit reports and other sensitive data, and harming people’s credit, this company will pay $20 million.”

A portion of the fine, $5 million, is slated for compensation for victims. People who found Vivint listed on their credit reports, or who were contacted by debt collectors for a purchase they didn’t make, may be eligible for compensation and can sign up for email updates here.

As part of the settlement, Vivint will also be required to implement employee training and an identity theft program.

“We are pleased to have resolved this matter related to certain historical practices,” the company said in a statement. “We had already taken steps before the FTC began its review to strengthen our compliance policies, and will continue to make this a focus going forward. We are deeply committed to operating with integrity and delivering exceptional service to our customers.”

This isn’t the first time the company has been accused of illegal sales practices.

Vivint had to pay $10 million in 2018 to settle a lawsuit with a competitor that alleged that Vivint representatives were impersonating their salespeople. ADT, another security company with door-to-door sellers, said Vivint salespeople would pretend to be ADT salespeople with an upgrade for existing customers and would instead trick customers into signing new contracts with Vivint. ADT claimed it received complaints from nearly 1,000 customers about Vivint agents making misleading or false statements.