Termite Control Guarantee Questioned
Attorney General Spitzer today announced a settlement with a national pest control service to reform its advertising practices and arbitration procedures.
Orkin Exterminating Company, Inc. settled cases with five states and the District of Columbia concerning its advertising campaign for its termite eradication service. The company was accused of misleading consumers by representing that its "Orkin Foam System" would keep termites from ever returning, when, in fact, this claim could not be substantiated. In addition, Orkin's advertising implied that its service came with a full warranty when, in fact, it did not.
Spitzer also raised concerns about the Atlanta-based company's binding arbitration policy for consumer warranty claims. Due to the high cost associated with the required arbitration procedure, Orkin's policy effectively discouraged consumers from pursuing warranty claims.
"Orkin will now be forced to back any claims of guaranteed results," Spitzer said. "In addition, under this agreement, consumers will now be able to pursue legitimate damage claims against Orkin more easily and effectively."
The settlement prohibits Orkin from:
- Representing that its subterranean termite control services are certain to be effective in preventing or eliminating an infestation unless Orkin is able to support such a claim by credible scientific evidence;
- Misrepresenting the terms of its guarantees or warranties for its subterranean termite control services; and,
- Advertising a "guarantee" unless it is accompanied by a "limited guarantee" or "limited warranty" disclosure and clearly directs consumers to carefully read the guarantee before purchase.
Orkin also agreed to allow consumers with monetary disputes of less than $10,000 to arbitrate their claims using the American Arbitration Association's considerably less expensive process under its consumer rules rather than the previously required commercial arbitration method.
In total, Orkin paid $150,000 to cover the costs of the investigation, of which New York State will receive $20,000.
Joining New York in the investigation and settlement with Orkin are Florida, North Carolina, Ohio, Texas, and the District of Columbia.
This case was handled by Associate Attorney General Robert Vawter of the Consumer Frauds and Protection Bureau.