Energy

Solar Companies Using ‘2008 Sub-Prime Lender’ Tactics To Sell Panels

The consumer group Campaign for Accountability (CFA) asked the Federal Trade Commission (FTC) Wednesday to investigate rooftop solar companies for misleading sales practices targeting senior citizens and other vulnerable populations in the same manner sub-prime lenders did before the 2008 financial crisis.

CFA sent a letter to the FTC after reviewing consumer complaints about companies that install rooftop solar panels. The letter states that solar companies have engaged in false and misleading behavior to market and sell panels and asks the FTC to investigate.

“We see some tactics similar to 2008 sub-prime lenders,” Daniel Stevens, executive director of CFA, told The Daily Caller News Foundation. “These companies will go out and find seniors or low income vulnerable populations. They can easily convince them to sign up.”

Stevens said that in one case a solar company held a free dinner to lure senior citizens into a complex contract they couldn’t understand.

CFA reviewed more than 1,200 complaints to the FTC that showed a widespread pattern of apparent fraud and abuse by solar companies.

The complaints state that solar companies deceived consumers about the true costs of installing solar panels by luring them in with low price quotes that later proved to be false, required them to sign confusing contracts, and promising energy savings that never materialized. This often led to consumers being forced to pay the companies large amounts of money.

“When they sign a 20-year contract, the financial situation doesn’t work out,” Stevens said. “They end up paying more for energy than they paid for the solar panels. The consumers are being hurt.”

Seniors and the poor are more vulnerable to issues like this because they tend to spend a higher proportion of their incomes on basic needs like energy while living on fixed incomes. Elderly individuals and the poor are much more likely to sign a complex contract without understanding that it may require them to pay a large amount of money.

“In one situation we saw, the person who purchased the solar panels died,” Stevens said. “Somebody who’s father had passed away was trying to pay off the remaining contract. The company wanted $25,000 to cover the costs of the panels.”

“These contracts are structured in a way so the consumer doesn’t know if it will be in their financial interests to sign up,” Stevens said. “They can’t tell what they’re signing up for in some cases. A lot of this is variable. They don’t know how much sun will hit their roof during most periods.”

Solar subsidies end up hurting the poor 1.4 to four times more than the rich, according to a study by the National Bureau of Economic Research.

“Subsidies are one thing that causes solar companies to do this,” Stevens said. “Consumers will set a rate at which they have to pay the company. If the panel doesn’t produce enough electricity to cover the costs of installation, the consumer has to pay for it.”

Solar subsidies were so lucrative that solar-leasing companies installed rooftop systems, which run at minimum $10,000, at no upfront cost to the consumer. Stevens says that the consumer can end up paying thousands of dollars in hidden fees buried deep in the contract.

“A lot of these consumer complaints indicate bad practices are actually happening,” Stevens said.”Consumers are reporting in these complaints that they’re getting scammed.”

The FTC hosted a public workshop last summer about consumer protection issues in solar energy. The workshop concluded that solar leasing contracts that contain confusing wording about energy tax credits and falsely promised saving on utility bills. Some contracts effectively made consumers unable to sell or buy homes that had solar panels installed.

“The FTC can enforce the law,” Stevens said. “If they conducted an investigation and find that these companies are misleading consumers, they can hold them accountable for that. The FTC has said they’re interested in looking into this.”

Stevens said that the threat of an FTC investigation could force rooftop solar installers to enact reforms, such as simplifying contracts or publishing example legal documents. These reforms could make it much harder for fraudulent behavior or unethical business practices to pay.

Solar and wind power collect 326 and 69 times more in subsidies than coal, oil, and natural gas, according to 2013 Department of Energy data collected by Forbes. Green energy in the U.S. received $13 billion in subsidies during 2013, compared to $3.4 billion in subsidies for conventional sources of energy and $1.7 billion in subsidies for nuclear, according to data from the Energy Information Administration.

Even proponents of solar power recognize its reliance on subsidies. Without high net metering payments, rooftop solar “makes no financial sense for a consumer,” Lyndon Rive, CEO of SolarCity, told The New York Times last February.

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