ADT Punished by US GovernmentBy: John Honovich, Published on Mar 14, 2014
The US government is cracking down on deceptive marketers. And the industry's least favorite company, ADT, has been punished.
Inside this note, we break down the issues, sharing the specific deceptive practices, impact and contrast with real customer opinions.
The US Federal Trade Commission charged ADT with deceptive marketing and ADT has settled (announcement).
The FTC complaint alleges payments of $300,000+ to deceive consumers.
The first offense is the 'Safety Mom' who went on an American TV show with an obvious, though undisclosed, shilling of ADT. Here's the video:
Of course, these events would lose much of their power if the presenter lead off by telling how much the company is paying them for this.
Another one comes from self proclaimed 'technology expert', David Gregg of BehindtheBuy, who did media appearances touting ADT Pulse.
ADT Settles / Terms
ADT has settled (see consent order). As part of their settlement, they do not need to admit these charges, but they do face significant restrictions, including:
- Clearly and prominent disclose any endorsements.
- Pull down any other existing undisclosed endorsements (you can report issues / abuses here [link no longer available]).
- For 5 years, keep records of any complaints, and documents demonstrating full compliance in marketing activities.
- The order will last for at least the next 20 years.
- Each violation of this order "may result in a civil penalty of up to $16,000" which unfortunately for ADT is pennies.
One trade magazine came to ADT's defense, emphasizing that:
"Being the dominant market leader, ADT has to endure more slings and arrows than most."
Life is so unfair to a company that can 'allegedly' spend hundreds of thousands of dollars to have glowing endorsements as fake independent reviews.
The reality is that ADT can use its marketing muscle and size to push through unfair practices. It is valuable for the government to intervene in such cases.
The real power is bad publicity and the threat that ADT could get more of it if others report on them. And because ADT has this consent agreement, the FTC is likely to watch them more closely.
Regular People Hate ADT
ADT does not do so well with people they do not pay.