The settlement stems from a case that the Department of Justice filed against the company on behalf of the FTC accusing the security company of using the identities of innocent unknown individuals to help potential clients pass a credit check that they were unable to pass on their own.
The action left hundreds of victims facing collection agencies or unknown charges on their credit reports. Those who have found themselves in these dilemmas should not hesitate to contact a lawyer experienced in identity theft, who can help clear a person’s credit and recoup the financial impact such a situation may have caused.
Who Was Responsible for the Vivint Fraud?
The individuals most responsible for perpetuating the fraud were the hundreds of seasonal employees that Vivint hires during the summer to go door-to-door to solicit new customers for the service. This salesforce is not paid any salary and is strictly commission-based, meaning they will not get paid unless they make a sale.
On average, the company hires about 4,000 young men and women for the job. They are mostly students who are promised lucrative summer jobs as long as they work hard. Although it was not stated directly, the company implied that a salesperson could make more sales if they cut some corners. While the company did not mandate any illegal action, Vivint was aware of its existence and did very little to stop it, according to the complaint that the FTC filed.
From April through October, this young and ambitious salesforce would go door-to-door armed with a tablet that contained a proprietary onboarding system. This system, called Street Genie, was used to check the credit background of potential clients. If the client passed the credit check, they would sign a contract for a new system valued at about $1,000. The service was accompanied with a contract that ranged in length from three to five years.
What Were the Scams the Salesforce Perpetuated?
When going door-to-door to solicit new customers for Vivint’s service, the young salesforce encountered numerous individuals who did not have a strong credit rating and as a result, were unable to be approved for a sale. Given the pressure and incentive to close a sale, these individuals found ways to approve multiple customers’ poor credit history.
There were a few methods they used to get a passing credit score for these individuals with poor credit, including the following:
- White paging: In this case, a salesperson would use the white pages to find another individual with a similar name to that of the person who failed the credit check. The sales representative would then input the other person’s address as the prospective client’s previous address and re-run the credit check. This would basically trick the system into approving a sale using someone else’s identity and credit score.
- Relative: In this scenario, the Vivint representative would ask the prospective client for a relative’s name. Just as in white paging, the salesperson would use the relative’s current address as the prospective customer’s previous one and re-run the credit score.
- Cosigner: The sales representative would add a co-signer to the contract to avoid a declined credit check. This person would be someone whom the potential client did not know, but someone the representative believed would be able to pass the credit check.
In all these instances, Vivint would open a new account with clients based on a credit score that was not their own. Complicating matters is the fact that those who were sold these packages with extended contracts and high price tags were at risk to default on their payments.
Who Got Hurt in These Frauds?
Given the low credit score of those who were being sold expensive security packages, failure to make payments was inevitable. Many of these individuals defaulted on their financial obligations, and it was not them that had to pay for it. It was the innocent individuals whose name Vivint’s sales representatives used to approve the sale in the first place.
These individuals had no idea that their credit was even used, and faced being harassed by bill collectors or worse, having their information forwarded to a collection agency. Others may have learned about the problem from seeing it on their credit report and not having any idea how it got there.
Many of these unfortunate victims never even heard of Vivint and had to spend their own time and money to dispute charges to which they never agreed. Those victims of identity theft should hire experienced legal counsel who can help them prove their innocence and expose their lack of knowledge about the entire situation.
After dealing with their own credit problems brought on by this deceptive practice orchestrated by Vivint, many victims reached out to the FTC and the Better Business Bureau accusing the company of identity theft.
What Was Vivint’s Response to the Fraud?
The complaint states that Vivint was aware of the white paging incidents as early as 2016 but chose not to act until 2017, when it terminated hundreds of employees for their involvement in the fraud. However, for many this termination was only temporary, as Vivint hired them back some time later. For one sales team, which had managed to generate millions of dollars in revenue, Vivint transferred them to a sister company until the following year.
The company made some attempt to prevent the fraud from continuing. It altered its Street Genie to not allow multiple credit checks based on the same address. However, it did not take long for a few clever individuals to determine a way around this latest obstacle. The sales representatives could modify the address slightly by adding an apartment number or changing something else minor.
The FTC complaint alleged that there were employees who reported the fraud to the company, which responded with only minor action. Vivint would impose a minor penalty on the worst offenders but otherwise allowed the fraudulent actions to continue. In fact, Vivint did not implement a written identity theft prevention program designed to detect, prevent, and mitigate identity theft until January 2020.
What Were the FTC’s Charges Against Vivint?
The FTC charged Vivint with violating the Fair Credit Reporting Act (FCRA), the FTC Act, and the Red Flags Rule. The FCRA violations stem from the company allowing its sales reps to use unrelated people’s credit reports without their permission in order to gain sales. This is a clear violation of the FCRA’s requirement that a company must have a permissible purpose for receiving a credit report.
The FTC Act violations occurred when Vivint turned over bogus debt to debt buyers or collectors. Moreover, the Red Flag Rule violations have to do with its lack of a written theft prevention program.
As for the settlement, Vivint was forced to pay $15 million, which was the highest amount ever in an FCRA case, plus an additional $5 million to compensate any injured consumers. There are also provisions in the settlement mandating that the company change the way that it conducts business.
The changes include the following:
- Implementing an employee monitoring and training program
- Establishing an identity theft prevention program
- Setting up a customer service task force to verify accounts before turning them over to a debt collector
- Obtaining an every-other-year assessment by an independent third party to ensure FCRA compliance
Who Should Hire a Lawyer?
There are a countless number of individuals who were injured in this scam who have made complaints to the FTC and the Better Business Bureau. In most cases, their stories were all the same: they received a phone call from a collector pertaining to their Vivint debt, and they had never even heard of Vivint.
These individuals’ reputation was adversely affected, and they could be contending with untold consequences of having problems with their credit report. Those problems can range from the blocking of a future purchase to being turned down for an apartment.
Philadelphia Identity Theft Lawyers at Francis Mailman Soumilas, P.C. Get False Reports Cleared Off Your Credit Report
If you were one of the many victims impacted by the fraud perpetrated by Vivint and its sales reps, contact the Philadelphia identity theft lawyers at Francis Mailman Soumilas, P.C. for assistance. We can help you reclaim your proper credit standing and gain access to the money to which you are entitled. We represent clients whose identities have been stolen. Complete our online contact form or call us at 215-735-8600 for a free consultation. With offices located in Philadelphia, Chicago, New York, and San Francisco, we serve clients nationwide.