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AT&T Settles Complaints Over High-Pressure Sales

March 1, 1994

VENTURA, Calif. (AP) _ AT&T has agreed to pay $1.25 million to defray costs of investigating shady sales tactics used by an indepedent distributor of its home alarm systems, a prosecutor said.

The giant telecommunications company cooperated in a year-long investigation of the distributor, Ideal Systems Inc., based in the Los Angeles suburb of Glendale, said David Fairweather, a Ventura County assistant district attorney.

Nearly 500 complaints were received from people throughout the state who bought the AT&T systems from Ideal, Fairweather said. Triple that number complained of the sales tactics even though they didn’t buy the alarms, he said.

Under a settlement approved Monday by a Municipal Court judge, AT&T will resolve any customer complaints it receives this year about the sales, even if it means fully reimbursing buyers, Fairweather said.

″AT&T has, in this case, promised to do whatever it takes,″ Fairweather said.

AT&T also will pay $1.25 million to law enforcement agencies to defray the costs of the investigation and to pay for consumer protection and education programs.

AT&T received many of the complaints, Fairweather said.

″I think AT&T recognizes that they could have done more to prevent that problem,″ he said.

As of Feb. 15, Ideal was no longer authorized to sell AT&T systems.

Ideal officials could not be reached in an after-hours call to the company’s headquarters.

″AT&T was happy to cooperate with the district attorney and other officials and we learned a lot from this situation,″ Randall L. Tidmore, general manager of AT&T’s security systems unit, said in a press statement. ″We have already instituted nationwide a number of rigorous changes in our processes designed to guarantee customer satisfaction.″

The district attorney’s office has filed a civil complaint against Ideal but is negotiating a settlement, Fairweather said.

″I have no evidence that Ideal’s upper echelon orchestrated this,″ he said. ″But Ideal, as a corporation, is responsible for what its employees did.″

Fairweather said that, from 1989 through 1993, Ideal salespeople would misrepresent their links to AT&T during telephone solicitations, using prospective customers’ trust in the AT&T name to arrange home meetings, Fairweather said.

During the home pitches, some of which lasted nine to 14 hours, the salespeople would claim to be AT&T employees, offer phony ″discounts″ to veterans and others in bargaining over the price, Fairweather said.

In addition, the salespeople would fail to mention that buyers legally had three days to change their minds after the purchases and even contend - falsely - that the home alarm system was faster than the 911 emergency telephone system, Fairweather said.

″There was no fixed price for the system,″ Fairweather said. ″The salesman was basically out to get whatever the market would bear.″

″The customer never realized that what was going on was a very sophisticated, hardball bargaining ploy.″

Customers bought systems for as little as $2,000 and as much as $8,000, Fairweather said.

Ventura County authorities conducted the investigation along with the California attorney general’s office and the state Department of Consumer Affairs, Fairweather said.

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