Alabama, Terminix enter $60M settlement after state investigation

State reaches $60M settlement with Terminix

MONTGOMERY, Ala. (WSFA) - Attorney General Steve Marshall announced a $60 million settlement Thursday between Alabama and Terminix International, a major termite inspection company.

According to Marshall, the settlement responds to Terminix’s alleged illegal business practices targeting Alabama consumers and violating several provisions of the Alabama Deceptive Trade Practices Act.

“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.

An investigation by the AG’s office and the Alabama Department of Agriculture and Industries found Terminix had engaged in a pattern of collecting annual termite protection premiums from consumers but did not deliver on the services they promised. Marshall says as a result, many homes and businesses suffered from termite infestation.

Marshall said when customers suffered damages due to Terminix’s failure to provide paid-for services, the company passed the cost back to the consumer, in some cases charging them “exorbitantly” high annual renewal rates.

“Terminix’s actions were intended to force consumers to cancel their lifetime protection contracts or to accept new Terminix contracts that provided fewer benefits than consumers' existing lifetime contracts,” Marshall added in a release.

In addition to inadequately treating consumer homes for termite protection, Terminix also failed to provide consumers with annual termite inspections. They also charged consumers extra money for pesticides they had already paid for, which had already been applied to their homes and businesses.

A statewide fund for consumer relief will be created to address consumer damages due to Terminix’s actions. The $60 million settlement with the State includes:

  • $25 million for Alabama Consumer Relief Fund for the payment of refunds to consumers who were overcharged by Terminix and those who were forced to pay other termite control companies money for services they should have received from Terminix.
  • $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 failure
  • 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 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.

According to the AG’s office, consumers who lost their lifetime Terminix contracts can have the contract reinstated at the reasonable price levels consumers were paying Terminix in 2018.

The Alabama Deceptive Trade Practices Act was designed to protect consumers from deceptive, fraudulent, unconscionable, and illegal acts committed by businesses operating across the state.

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