Over 12,000 residents in the counties of Mobile, Baldwin and Monroe are being withdrawn due to termites in a “historic” $ 60 million settlement that the state of Alabama reached from Memphis on Thursday with Terminix International.
The settlement came in response to allegations that the company engaged in illegal business practices and follows the company’s loss in a $ 2 million lawsuit filed by a Midtown Mobile homeowner who alleged Terminix did House never handled for years.
A US $ 25 million nationwide fund will be set up to assist consumers harmed by Terminix’s settlement actions. Another US $ 20 million will go to the state, which is used for consumer protection.
Terminix will provide $ 10 million to withdraw homes in the three coastal counties, whether or not they suffered termite damage as a result of Terminix’s business practices. An additional $ 650 goes to Alabama consumers who have left Terminix and hired another company to provide termite protection, or pay the difference between the previous customer’s new termite protection cost and the previous termite protection cost.
“In the broadest sense, I think today’s message is that you are not cheating on Alabama consumers,” said Steve Marshall, Alabama attorney general. He said the deal was the largest consumer settlement achieved in Alabama.
The settlement concluded an investigation opened by Mobile County’s district attorney Ashley Rich in February 2019. She had received several complaints from Terminix customers about price increases for their termite bonds. According to TV media reports, customers created bills that showed an increase from $ 320 to $ 1,499.
“The result of the complaints was that it was a big problem,” said Rich. “Tens of thousands of customers could not pay these exorbitant prices and could no longer be a Terminix customer who was protecting their homes.”
Rich said the volume of complaints was “wider” than her office could handle, and she contacted Marshall for help.
The Alabama Attorney General and Department of Agriculture and Industry have jointly investigated that Terminix collects annual termite production awards from its Alabama customers, but does not provide or provide the termite protection services promised in their contracts. As a result, according to the Attorney General, “many households and businesses have suffered from termites.”
“We have a big problem with termites on the coast,” said Rich.
When customers suffered damage because Terminix did not provide paid services, the company “simply passed those costs on to Alabama customers and, in some cases, charged them large renewal rate increases of up to 1,000 percent,” the Attorney General said. The company’s intent was to force consumers to cancel their lifetime protection contracts or to accept new Terminix contracts that offer fewer benefits than existing consumer lifetime contracts, according to the attorney general.
The investigation also found that Terminix did not provide consumers with “competent and thorough annual on-demand termite inspections” under the company’s contracts. According to the attorney general, Alabama Terminix consumers were paying extra money for pesticides that they had already paid for and that were already being used on their homes and businesses.
A Terminix executive said in a statement published in the Memphis Commercial Appeal: “A government sponsored, non-litigation road will resolve compensation disputes faster, which will bring immediate benefits to our Impact customers and reduce future litigation claims.”
The company reported that the settlement will result in a loss of $ 7 million in the third quarter, according to the newspaper.
Marshall and Rich said they were unaware of any future litigation against other pest control companies. TV reports showed that the Alabama Department of Agriculture and Industry was investigating more than 416 consumer complaints filed against various pest control companies.
Rich said there is an analogy between Terminix’s behavior with its coastal contracts and unscrupulous contractors’ price cuts after a hurricane that requires quick repairs to damaged property.
“Everyone in Mobile and Baldwin counties is used to price cuts,” said Rich. “That is exactly what Terminix did – the termite infestation caused them to erode consumers and make more money. It is no different. “