Vivint Smart Home Inc., Provo, Utah, has agreed to pay the United States $3.2 million to resolve allegations under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) that Vivint employees made false statements to secure financing for customers’ purchases of Vivint’s home monitoring products, the Justice Department announced. FIRREA imposes civil penalties on any person or entity that violates certain predicate federal statutes.
Vivint is a provider of smart home monitoring services and frequently obtains new customers through door-to-door sales by Vivint sales representatives. The United States contended that, from 2017 to 2020, certain Vivint sales representatives used their personal funds to cover the cost of initial financing payments on behalf of Vivint customers who sought financing to purchase Vivint’s products, while making false and misleading statements to the federally insured financial institution providing the financing that made it appear as if the borrowers had funded the initial payments.
“Making false statements about the creditworthiness of borrowers undermines the integrity of our banking system and puts at risk the taxpayer dollars that help to support it,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Civil Division. “We will pursue those who fail to provide truthful information needed by federally insured financial institutions to make appropriate lending decisions.”
This matter was investigated by the U.S. Attorney’s Office for the District of Utah and the Civil Division’s Commercial Litigation Branch (Fraud Section). Investigative assistance was provided by the FBI.
“American business should be based on truthful disclosures, and false and misleading statements should never be part of dealings with federally insured financial institutions,” said U.S. Attorney John W. Huber for the District of Utah. “This resolution should send a strong message to corporations that using fraudulent tactics to secure consumer sales will not be tolerated.”
The allegations resolved by the settlement were initially provided to the United States in a declaration submitted under the Financial Institutions Anti-Fraud Enforcement Act, which provides for rewards to eligible declarants who provide information about potential FIRREA violations.
In a statement, Vivint said, “We are pleased to have reached this resolution related to certain past sales practices by some of our sales representatives. In addition to cooperating with the DOJ, we have addressed the issues and continue to strengthen our compliance policies, practices and procedures.”
CPI Security Systems, SDM’s 2019 Dealer of the Year, filed a lawsuit in September against Vivint accusing the company of tricking customers into signing up for Vivint’s services by posing as CPI employees or representatives. A month before that, ADT filed an unfair competition suit in Florida against Vivint, alleging that Vivint salespeople go into ADT customers’ homes, get them to sign Vivint contracts and install Vivint alarm systems in their homes under false pretenses.
Vivint also had its solicitation permit revoked by police in Huntersville, S.C., for breaking door knocking rules and being overly aggressive just two weeks after being granted a solicitation permit in June 2019.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.