As the residential solar industry experiences rapid growth, thanks in part to incentives like those in the Inflation Reduction Act, it’s also facing a troubling rise in scams targeting unsuspecting consumers. To combat this issue, the U.S. Department of the Treasury, the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC) have joined forces in a new initiative designed to protect consumers from deceptive practices in the solar market.
The effort, launched on August 7, encourages consumers to report scams while providing them with essential information about the red flags to look out for when considering solar panel installations. The aim is to improve the tracking of complaints and hold companies accountable for unethical behavior.
“We’re kicking off this effort with an advisory to make consumers aware of these scams and enable them to file complaints with key regulators who can stop bad actors,” said Wally Adeyemo, U.S. Deputy Secretary of the Treasury. “By working together, we want to help consumers lower their home energy costs while shielding them from unfair, deceptive, and abusive practices used by a small number of businesses.”
Incentives for solar power have led to a boom in the residential solar market, but this growth has brought its own challenges. Independent contractors who are often incentivized to make a sale can sometimes engage in deceptive sales tactics. Many solar companies rely on door-to-door salespeople who may overpromise, underdeliver, and use high-pressure tactics. Some even misrepresent the government incentives, claiming that customers will receive a government check when, in fact, the incentive is a tax credit.
Lawsuits abound, with many consumers alleging that they were misled about the savings they could expect or were tricked into signing contracts with inflated prices, hidden fees, and unclear terms. In some cases, there are even accusations of forged signatures or the use of electronic records to obscure what customers are signing.
To address this, the government has issued advisories containing fact sheets for consumers. These resources explain how to identify shady practices, such as sales pitches that claim solar panels are part of a government program or promises of eliminating energy bills. They also warn against time-limited offers or deals that push for immediate action, as well as companies with excessive fees like cancellation charges or large sign-up fees.
The key advice from regulators is for consumers to file complaints if they’ve fallen victim to a scam, directing them to ReportFraud.FTC.gov and the CFPB’s complaint portal. Many states also have consumer protection bureaus where complaints can be lodged.
Despite these efforts, previous attempts to regulate the solar industry have been less effective. While several state attorneys general have taken action against solar companies, settlements have often resulted in minimal penalties. For example, in 2019, Vivint Solar (now part of SunRun) reached a settlement with New Jersey over deceptive practices but paid only $122,000 and promised to modify its business practices. However, lawsuits filed in 2022 revealed that the company allegedly continued engaging in deceptive door-to-door solicitation.
The rise in consumer complaints about solar sales practices is alarming. The FTC received 5,331 complaints about solar panels from January to September 2023—a 31% increase from the previous year and a staggering 746% rise from 2018, when the agency received just 630 complaints.
The government’s new effort is just the beginning of a broader push to protect consumers and curb the growing problem of solar scams. With increased awareness and proactive reporting, officials hope to clean up the residential solar market and ensure that consumers can make informed choices without falling prey to bad actors.
