MONTGOMERY, Ala. (WKRG) — Attorney General Steve Marshall says a $60 million State settlement with Terminix International was reached Thursday regarding accusations of illegal business practices targeting Alabama consumers.
“Today, my office has approved a major consumer settlement against Terminix International for systematically overcharging their Alabama customers for termite services and in many cases failing to honor their service contracts, often resulting in damages to homes and businesses,” said Attorney General Marshall. “The public’s first complaints about Terminix’s illegal activities were received by
Mobile County District Attorney Ashley Rich, who in turn, notified my office, and we began our investigations which led to today’s settlement with Terminix and the beginning of restitution for the many Alabamians who suffered financial loss from the company’s illegal actions. I commend District Attorney Rich’s vigilance in seeing that Alabama consumers’ rights are protected.”
Due to the illegal actions of Terminix, a statewide fund for consumer relief will be developed in response to the incident.
The Alabama Attorney General’s office and the Alabama Department of Agriculture and Industries discovered through investigation Terminix would collect annual termite protection premiums from Alabama consumers but fail to provide consumers with the benefits listed within the contract, causing many homes and businesses to suffer termite infestation.
“I am extremely pleased that when I brought my concerns about how many MobileCounty citizens had been wronged by Terminix, the Attorney General agreed to take on the fight to bring justice to our victims,” said Mobile County District Attorney Ashley Rich. “Unfair business practices like those that have been committed by Terminix cannot be tolerated in our community and our State, and it takes an Attorney General with many resources to be able to handle litigation of this magnitude.”
After the ensued damages, customers were charged to handle those costs. Some customers were charged high annual renewal rate increases of up to 1000 percent. According to a news release, “Terminix’s actions were intended to force consumers to cancel their lifetime protection contracts or to accept new Terminix contracts that provided less benefits than consumers’ existing lifetime contracts.”
Additionally, Terminix also failed to provide consumers with competent and thorough annual termite inspections as required by Terminix contracts. Furthermore, Alabama consumers were being charged extra for pesticides already used on their homes and businesses as they previously paid for it.
After being confronted with the evidence of its illegal acts, Terminix entered into a $60 million settlement with the State of Alabama to include:
- $25 million for Alabama Consumer Relief Fund for the payment of refunds to consumers
who were overcharged by Terminix and those consumers who were forced to pay other
termite control companies money for services they should have received from Terminix.
Per the terms of the agreement and pending court approval, this claims process will be
set up in the coming months at which time the Attorney General will announce how
claims are to be made by consumers.
- $10 million to retreat over 12,000 customer homes in Mobile, Baldwin and Monroe
counties, whether or not those homes had suffered termite damage due to Terminix’s
- Refunds to consumers of any unconscionable price increase paid by consumers in
termite protection premiums in 2019 and 2020. This mandate requires Terminix to pay
millions of dollars in refunds to thousands of Alabama consumers.
- $650 to any Alabama consumer who left Terminix and hired another company to
provide termite protection, or pay the difference in the former customer’s new termite
protection costs and their previous termite protection costs.
- New, competent, and complete inspections of homes in the areas affected by Formosan
termites to ensure no termite infestation problems still exist, and Terminix will be
repairing all termite damage claims in the affected areas.
- $20 million to the Attorney General’s Office to settle the State of Alabama’s claims
against Terminix and to be reinvested in statewide consumer protection efforts.
- $4 million to the Alabama Department of Agriculture and Industries.
- $1 million charitable contribution to the Auburn University Department of Entomology.
Finally, Terminix has agreed to adopt a reasonable and affordable price increase
schedule to prevent it from charging consumers with unconscionable and exorbitant
annual rate increases for its termite services. Consumers who lost their lifetime
Terminix contracts will have them reinstated, if they so desire, at the reasonable price
levels consumers were paying Terminix in 2018.
The Terminix investigation was conducted by the Alabama Attorney General’s
Consumer Interest Division, working in conjunction with the Alabama Department of
Agriculture and Industries.
Attorney General Marshall thanked his Consumer Interest Division for its hard work to
secure the historic settlement and, in particular, Assistant Attorney General Olivia
Martin and Assistant Attorney General Dan W. Taliaferro.
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