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Home alarm companies have surged to the top of the list of consumer complaints in Utah, a state investigator told a consumer protection conference on Thursday.
Meanwhile, companies that offer "coaching" services, such as how to operate an online business and telemarketing calls, fell to No. 2 on the complaints list, said Adam Watson, chief investigator for the Utah Division of Consumer Protection.
Maureen Ohlhausen, one of four commissioners of the Federal Trade Commission, keynoted the Utah Consumer Protection Summit that brought together state and federal regulators, companies and attorneys.
Ohlhausen emphasized the need for federal, state and local cooperation to tamp down on consumer fraud.
Many of the complaints about alarm companies come from the practice of slamming or poaching where one company's sales people pretend to represent another company that already has a system in place in a consumer's home, said Watson.
"They knock on the door and say they're here to upgrade your alarm system," he said. Instead, they tear out the other company's equipment and install their own after getting the consumers to sign a three-to-five-year contract.
Consumers don't realize what's happened until the first company calls and says its equipment has stopped working or a bank statement shows that consumers are paying two alarm companies at the same time, Watson said.
Utah also continues to see a lot of what's known as affinity fraud where members of a tight-knit group are defrauded by another person in the group who takes advantage of feelings of friendship and shared interests, said Michael Palumbo, an assistant Utah attorney general in the markets and financial frauds division.
Often those involve pyramid or Ponzi schemes that present special problems for regulators when someone who invests then tries to recruit new investors, making them both victims and perpetrators of the crime, he said.
"So you'll have victims who have put money into this investment scheme, then [they] solicit other victims to put more money into it," Palumbo said. "The question is … at what point is the person who is at first a victim and then possibly an accomplice, at what point does culpability attach."
Other points at the conference included:
• Ohlhausen, in an interview with reporters, said the FTC is focusing attention on whether companies that use a multi-level marketing business model are relying on recruiting new independent distributors for their revenue rather than on actual sales to consumers. "We have been paying attention to scams in this area," she said.
• Christopher Peterson, a special adviser at the federal Consumer Financial Protection Bureau, said the agency is proposing new rules for the payday and auto title loan companies that would require them to verify that consumers have the ability to repay loans that can carry interest rates of as much as 500 percent.
The bureau doesn't regulate the rates "but we should expect those loans are made with some consideration of whether the borrower has the ability to pay that loan back," said Peterson, who is on leave from his post as a professor of law at the University of Utah.
• Francine Giani, executive director of the Utah Department of Commerce, praised the cooperation between her department and the Utah attorney general's office on enforcement issues. Giani had a strained relationship with former Attorney General Mark Shurtleff but praised the cooperation under current Attorney General Sean Reyes.
"We feel like we have a better partnership than we've ever had," she told reporters.
The Division of Consumer Protection's Top 10 scams in Utah from its 2014 annual report:
1. Alarm Systems
2. Coaching Services/Telemarketing
3. Retail sales/others
4. Internet Offer/Sales
5. Home Improvement/Repair
6. Retail Sales/Deposits/Refunds
7. Auto Repair/Sales
8/ Billing Fraud
9. Health Spas: Health Spas that have closed down failing to provide consumer refunds.
10. Charitable Solicitations