As Vivint fights $189 million jury verdict for deceptive tactics, it says it has made changes

Vivint Smart Home and Vivint Solar have paid fines or settlements in more than 20 cases since 2009.

(Francisco Kjolseth | The Salt Lake Tribune) Vivint Smart Home security signs in Salt Lake City neighborhoods on Wednesday, Sept. 6, 2023. Vivint has faced multiple cases in the past decade claiming it has used deceptive sales practices, many related to its home security sales teams.

The man who appeared on Matt Heirs’ front porch one summer day in 2020 claimed to be a CPI Security employee — “one of the guys” who had installed Heirs’ home security system. The man said he was there to check for system upgrades that might be available, Heirs remembers, and he wanted to come inside to look at the panel.

But Heirs knew the guys who installed his home security system. He went to high school with both of them. This man on his porch in a green shirt was not them.

“I had just read a post [on Nextdoor] where people were posing as security professionals and actually disconnecting security systems so they could come back and rob the house,” Heirs said in an interview. “The whole time, he was looking behind me, not in my eyes. It just made me feel really uneasy.”

Heirs told his 14-year-old daughter to call 911 and report an attempted home invasion. Until police arrived, he held his potential home invader “at bay” with the softball bat he and his daughters had just been playing with.

The man in green was not a burglar or a home invader. He was a salesman for Vivint Smart Home, the Provo-based company with customers across the country, the namesake of the former Vivint Arena — and a decade-long record of paying millions in settlements and fines for claims of deceptive practices.

Heirs testified earlier this year to a federal jury in North Carolina, which found Vivint intentionally misled CPI customers to trick them into signing new contracts with Vivint.

And jurors returned the largest verdict yet against Vivint: $49.7 million in damages for competitor CPI — plus an additional $140 million in punitive damages.

The largest previous amount in Vivint’s list was a $20 million settlement it reached with the Federal Trade Commission in 2021. The FTC announced in August that more than 9,000 people whose credit reports may have been “misused” by Vivint can now apply for compensation from that settlement.

(Christopher Cherrington | The Salt Lake Tribune)

Vivint entities, which include Vivint Smart Home and Vivint Solar, have paid fines or settlements in more than 20 cases since 2009. Some cases, as in North Carolina, were brought by private companies or customers. But state attorneys general across the country also have accused Vivint of misleading or aggressive sales tactics.

Attorney Charlie Eblen, who represented CPI in the North Carolina trial, argued that Vivint had accepted the financial consequences for deceptive practices as “the cost of doing business.” He said in an interview, “For 14 years, attorneys general have tried, through fines and other mechanisms, to stop this.”

Vivint, which denied wrongdoing, is arguing that a judge should alter the judgment or order a new trial, contending the jury’s “inflated” awards were not supported by evidence and exceed legal limits.

And Vivint Chief Ethics and Compliance Officer Daniel Garen said in a statement to The Salt Lake Tribune that the company has made changes since the 2021 FTC case.

The settlement included a requirement that Vivint start an “employee monitoring and training program” and an identity theft prevention program, plus a customer service task force “to verify that accounts belong to the right customer before referring any account to a debt collector.”

Garen said the company is “glad to see [the settlement funds] being distributed.”

“Vivint has taken tremendous steps to strengthen its compliance policies, and those efforts have resulted in Vivint maintaining a perfect track record of FTC compliance through six subsequent audits conducted on behalf of the FTC since that settlement,” Garen said. “We are committed to operating with integrity and are grateful to serve over 2 million customers throughout North America.”

The fight in North Carolina

Vivint did not respond to specific questions about its compliance policies, or whether or how widely the company still sells its products door-to-door. It partnered with Best Buy in 2017 to sell its products in retail stores, but ended that partnership the next summer and cut 400 retail sales positions, according to a 2018 statement from its previous parent company, ATX Group Holdings.

The company went public in 2020 after merging with Mosaic Acquisition Group; then NRG Energy, headquartered in Houston, Texas, purchased Vivint in 2022 for $2.8 billion. Vivint Solar was acquired by Sunrun in 2020.

In its earlier legal response to CPI’s suit, Vivint claimed that CPI had been deceptive by “defaming Vivint and deceiving customers about Vivint.”

By posting alerts about Vivint on its website and warning customers about Vivint’s sales people, the response said, CPI engaged in an ongoing, “active campaign” to unfairly compete with Vivint, undermine and damage Vivint’s good will and reputation, and disrupt Vivint’s potential and current long-standing relationships with its customers.

While several suits filed against the company argue that Vivint has built deception into its business model, Vivint has said in statements and legal rebuttals that such practices are incongruent with its company ethics.

But those statements are “lip service,” Eblen argues. He is now representing Alert 360, a home security company based in Oklahoma, in an almost identical case to CPI’s, filed against Vivint in federal court in Oklahoma.

The CPI trial included testimony from former employees who claimed Vivint knew its “worst actors” were also its highest performers, he said. In court documents, former employees alleged Vivint “fired” people from Vivint Smart Home, only to hire them at Vivint Solar and eventually rehire them at Vivint Smart Home.

“It was just a shuttle game,” Eblen said. “[Vivint] tolerated sales reps generating these complaints… as long as the money was coming in.”

Kenneth Gill, CEO of Charlotte, North Carolina-based CPI, said litigation was the “last resort” in 20-year battle. Gill sent “multiple” cease-and-desist letters and called Vivint executives directly over the years, he said. CPI has an “entire team dedicated to responding to customers duped by Vivint,” Gill said in an email to The Tribune.

“Since it seemed the [Department of Justice], state licensing boards, and law enforcement couldn’t stop them, I decided it was time to do what I could to stop them,” Gill said. “Litigation in federal court seemed to be the last option.”

Heirs, one of multiple CPI customers who testified at the trial, had a CPI sign in his yard. The irony, he said — beyond calling police about a home security salesperson — is that had the Vivint representative been honest, Heirs probably would have let him in.

“If he would have come out and just said, ‘Hey, we’re CPI’s competitor,’ I would have listened to him,” Heirs said. “The worst thing I could do was just say no. But now, he gets his company sued.”

9,000 customers potentially impacted

The 2021 settlement with the FTC said Vivint’s door sales representatives used other peoples’ credit reports — often people with similar-sounding names — to help prospective customers qualify for loans.

Sales reps also asked customers for the name of someone they knew with a better credit history, the settlement alleged, and named that person as a co-signer without their knowledge or permission.

Vivint agreed to pay $20 million in damages, roughly $5 million of which will be paid to affected people.

A spokesperson for the FTC did not respond to a question about how many potential claimants are in Utah.

In a news release, the FTC said it will send notices directly to impacted people, either by mail or email. Consumers will have until Oct. 9 to submit a claim.

Shannon Sollitt is a Report for America corps member covering business accountability and sustainability for The Salt Lake Tribune. Your donation to match our RFA grant helps keep her writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.