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FOX 13 Investigates: Under oath, Vivint Smart Home executives told how sales staff deceived the company

Posted at 9:42 PM, Feb 10, 2022

SALT LAKE CITY — In 2017, a manager in the account creation department at Vivint Smart Home gave a presentation showing just how prevalent deceptive tactics were at the company.

Among the things the manager told other Vivint executives, according to court documents:

  • Sales staff were misstating customer data to qualify them for credit.
  • To qualify some customers for financing, sales reps would find people with similar names – a method called “white paging” – and use that other person’s credit.
  • If their customer fell behind on payments, the sales reps would call into Vivint Smart Home customer service, impersonate the customer and pay the balance.

“The point of that was then [sales staff] would qualify for a much larger back-end bonus,” said Mark Pugsley, an attorney representing whistleblowers.

That 2017 presentation, and what Vivint Smart Home did after, are being discussed in two lawsuits filed by competitors. Through the summer and fall of 2021, Vivint Smart Home executives testified in depositions. While most of the transcripts haven’t been made public, attorney descriptions of them have been entered in pre-trial filings.

The deceptive practices have had real world consequences. FOX 13 News reported last year about how people who never signed with Vivint Smart Home, such as Dionne Crump, a grandmother in Detroit, had accounts opened in their names, were pursed by collection agents and had their credit impacted.

FOX 13 Investigates: How Vivint Smart Home used what a federal official calls 'identity theft' to boost sales

Vivint Smart Home in 2021 settled cases with the U.S. Department of Justice and Federal Trade Commission for about $22 million.

Federal authorities began investigating after complaints from Pugsley’s clients.

“One of them had been terminated for trying to bring to light internally these bad sales practices,” said Pugsley, in an interview with FOX 13 News – his first about the case.

After that 2017 presentation, the court records show, Vivint Smart Home fired up to 130 of the offenders.

“They fired them,” Pugsley said, “but really what happened was they shuttled them over to Vivint Solar, their sister company.”

The CEO of Vivint Solar at the time was David Bywater. He is now the CEO of Vivint Smart Home.

After about a year, according to court records and Pugsley, at least some of the sales staff were rehired by Vivint Smart Home. One of those who returned eventually rose to a divisional vice president. He was terminated again in 2020, according to court documents, after more complaints about him and his sales team.

Records show Todd Pedersen, Vivint Smart Home’s founder and – until last year – its CEO, was aware of the deceptive tactics.

One former sales manager testified that while Pedersen didn’t tolerate deceptive practices, he gave people second and third chances. That sales manager also testified that whether an employee was a good seller was a factor in whether he or she was disciplined or terminated.

Vivint Smart Home representatives declined to make anyone available for an interview. However, Daniel Garen, the company’s chief ethics and compliance officer, issued a statement.

“While we are not able to comment on pending litigation, we look forward to having these matters settled in a court of law.

“Vivint is committed to operating the business with integrity and has taken significant steps over the past few years to ensure its salespeople understand and comply with the company’s policies and procedures and uphold the highest standards of operational excellence when interacting with potential and existing customers.”

Selling for Vivint Smart Home can pay well. One vice president testified the top 10 sellers -- excluding managers -- earned an average of about $230,000 a year.

The Vivint Smart Home depositions were for lawsuits filed by CPI Security and ADT. All three companies offer home monitoring technology and services.

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CPI and ADT each allege sales staff for Vivint Smart Home used deceptive tactics to sign CPI and ADT customers. Vivint Smart Home has generally denied the claims. Customers have testified sales reps sometimes claimed CPI or ADT had been sold or made the customers believe Vivint Smart Home was in a partnership with the other two companies.

The CPI trial has been delayed by the pandemic. It’s scheduled for June in a federal court in Charlotte, North Carolina. ADT’s lawsuit is scheduled for federal trial in December in Miami.

Abe Bakhsheshy, a professor of organizational at the University of Utah’s school of business, said corporate leaders must emphasize ethics and see that they are enforced at every level of the organization. He spoke only generally on the topic.

“Research clearly shows,” Bakhsheshey said, “that you may not get caught today if you violate the law or ignore ethical principle, but eventually it catches up with you.”

For all the ways Vivint Smart Home’s staff made sales, the company has yet to report an annual profit to investors.

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