By CAROLINE BECK, Alabama Daily News
MONTGOMERY, Ala. – The state has reached a $60 million settlement with Terminix International over illegal business practices targeting Alabama consumers, Attorney General Steve Marshall said Thursday.
“A historic settlement, not only as to the recovery that will take place, but more importantly as to the scope of the fraud that we found with Terminix and what it did for consumers across the state,” Marshall said during a press conference.
An investigation by Marshall’s office and the Alabama Department of Agriculture and Industries revealed that Terminix engaged in a pattern of collecting annual termite protection premiums from Alabama consumers, but failed to deliver or provide the termite protection services promised in consumers’ contracts.
As a result, many homes and businesses have suffered termite infestations and some families have been forced to leave their homes, Marshall said.
Marshall said this is the largest Alabama-specific settlement case the state has ever been involved in.
Mobile County District Attorney Ashley Rich, who brought the problem to Marshall’s attention, said thousands of citizens in Mobile County have been affected by Terminix’s inadequate services.
“I am extremely pleased that when I brought my concerns about how many Mobile County citizens had been wronged by Terminix, the Attorney General agreed to take on the fight to bring justice to our victims,” Rich said.
“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.”
The investigation also found that Terminix was charging exorbitantly high annual renewal rates of up to 1,000% for some consumers.
In addition to not treating homes adequately for termite protection, Terminix also failed to provide competent annual termite inspections as required by its contracts.
Memphis-based Terminix announced that the settlement would result in a $7 million third-quarter loss. Tony DiLucente, Terminix Global chief financial officer, said in a statement published by the Memphis Commercial Appeal, “a state-sponsored, non-litigated avenue more quickly resolves damage claim disputes, which will provide immediate benefits to our impacted customers and reduce future litigated claims.”
The settlement money will largely go to a $25 million consumer relief fund for refunds to consumers who were overcharged by Terminix and those consumers who were forced to pay other termite control companies for services they should have received from Terminix.
Marshall said that the relief fund can be replenished if that $25 million is exhausted completely.
Other areas where the settlement funds will go include:
- $10 million to retreat over 12,000 customer homes in Mobile, Baldwin and Monroe counties.
- Refunds to consumers for price increases 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.
- $20 million to Marshall’s office 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, which helped provide assistance in the investigation.
The most egregious cases were seen in Mobile county or counties near Alabama’s coast, but Marshall said it is a statewide problem and anyone who has been wronged by Terminix in the state can apply for consumer relief payments.
This settlement wraps up an investigation that began in the spring of 2019 after Rich received multiple complaints from consumers about large increases in their termite bonds.