Alabama reaches $60 million settlement with Terminix over illegal practices, AG says

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MONTGOMERY, Ala. (WDHN) — The state of Alabama reached a “historic” $60 million settlement with Terminix International over alleged illegal practices, according to a Thursday announcement from Attorney General Steve Marshall.

The announcement said the Alabama Attorney General’s office and the Alabama Department of Agriculture and Industries investigated the company for allegedly collecting annual termite protection premiums from Alabama residents without providing the promised termite protection services. The announcement also said the company neglected to conduct thorough annual inspections as part of its contractual operations.

The AG’s office said due to this, termites ravaged homes and businesses in the state. When the damage occurred, Terminix passed the cost to the consumer, “charging them exorbitantly high annual renewal rate increases of up to 100 percent.”

“The public’s first complaints about Terminix’s illegal activities were received by Mobile County  District Attorney Ashley Rich, who in turn, notified my office, and we began our investigations which led to today’s settlement with Terminix and the beginning of restitution for the many Alabamians who suffered financial loss from the company’s illegal actions,” Marshall said. “I commend District Attorney Rich’s vigilance in seeing that Alabama consumers’ rights are protected.”

The announcement goes on to say Terminix did this to make customers cancel their lifetime protection contracts or buy into new contracts with fewer benefits.

“Additionally, Alabama consumers were paying extra money to Terminix for pesticide they had already paid for and that had already been applied to their homes and businesses,” the release states.

By doing so, the AG’s office said Terminix broke provisions of the Alabama Deceptive Trade Practices Act.

“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,” said Mobile County District Attorney Ashley Rich. “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.”

To remedy the wrongdoing, Terminix settled with the state for $60 million, which will go into relief funds for the consumers hurt by the company’s actions.

The money will be used in the following ways:

  • $25 million for Alabama Consumer Relief Fund to refund consumers who were overcharged by Terminix and were forced to pay other termite control companies to make up for Terminix’s failings. The claims process for this will be set up in a few months by the attorney general.
  • $10 million to re-treat over 12,000 customer homes in Mobile, Baldwin, and Monroe counties. This will even apply to homes whether termites damaged their homes due to Terminix.
  • Refunds to people who paid any unreasonable price increases in termite protection premiums in 2019 and 2020. Terminix will be required to pay millions of dollars in refunds to thousands of Alabama consumers.
  • $650 to any Alabama consumer who left Terminix and hired another extermination company for termite protection or had to pay the difference “in the former customer’s new termite protection costs and their previous termite protection costs.”
  • To pay for complete inspections of homes in the areas affected by Formosan termites to ensure their extermination. Terminix will also repair all termite damage claims in these areas.
  • $20 million to the Attorney General’s Office to settle the State of Alabama’s claims against Terminix and 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.

Terminix also agreed to implement a reasonable and affordable price increase schedule to keep from charging consumers with unreasonably large annual rate increases for termite protection. Consumers who lost their lifetime Terminix contracts will be able to renew their lifetime contracts for the “reasonable” prices they paid in 2018.

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