ALBUQUERQUE (CN) — New Mexico on Thursday accused solar power company Vivint of defrauding customers through unconscionable business practices, racketeering, and clouding titles to its customers’ homes.
Vivint, a Utah-based company that operates in more than 20 states, offers to design, install and maintain solar systems for New Mexico customers’ homes with no initial cost to the consumer. In return, the customer agrees to buy back the power produced by the solar system from Vivint.
But New Mexico Attorney General Hector H. Balderas calls Vivint’s solar model a “trap” in the lawsuit in Bernalillo County Court. He seeks restitution, civil penalties and a permanent injunction.
“Vivint has skillfully crafted, baited, and set a ‘free’ trap,” Balderas wrote. “Vivint’s ‘free’ trap, in truth, is not free at all; rather, it hooks consumers into paying more for energy, entangles consumers’ property rights, and ensnares consumers with a twenty-year contract called a ‘Residential Solar Power Purchase Agreement.’”
Balderas says that though Vivint promises savings of 10 percent, 20 percent — up to as much as 80 percent — its customers pay more per kilowatt hour than do customers of the Public Service Company of New Mexico, the state’s leading power company.
And, the state claims, because Vivint conceals an annual 2.9 percent price increase in the complex contract it requires customers to sign, the customers are trapped into a more than 72 percent price hike by the end of the 20-year contract.
Vivint sales reps who go door to door are encouraged to grossly exaggerate the savings consumers may see on their power bill, the state claims. Those who sign up are not provided with copies of the contracts they sign, nor are they advised of their cancellation rights, according to the complaint.
And because Vivint routinely files UCC-1 Financing Statements, or “fixture filings” on the homes of its customers, identifying the customers as debtors, purchase of a Vivint system can cloud the title of customers’ homes, which can delay title transfer or make it impossible to sell the home without Vivint’s approval.
38-page complaint cites a laundry list of statements culled from Vivint’s promotional materials which the state calls exaggerated or false.
Claims such as “Consumers will save ‘10% – 30%’ off their electricity rates” and “Solar panels increase home values” are deceptive, while others, such as, “All of us have already paid for this through state and federal taxes” are flatly untrue, according to the state.
Balderas said in a statement that he “is committed to expanding access to clean, affordable solar energy across New Mexico, and will not tolerate bad actors who prey on the good intentions of New Mexico families and small businesses.”
Vivint told Reuters news service that its practices are legal. “While we take these allegations very seriously, we strongly believe this lawsuit lacks merit,” Vivint told Reuters in an email.
Balderas’ 17-count lawsuit seeks penalties of up to $5,000 for each violation of the
New Mexico Unfair Practices Act, including misrepresenting the nature of the service, falsely disparaging the services of a competitor, misrepresenting prices, omission of material facts, and falsely denying that the company places liens on consumers’ homes. Charges include unconscionable trade practices, failing to acquire proper permits for door-to-door sales, failing to inform consumers of their right to cancel, failing and to provide consumers with cancellation paperwork, and racketeering.