Termite problems can be devastating and require the assistance of an exterminator who engages in fair and legal business practices. But Terminix International recently settled two cases to resolve possible termite litigation. These include a historic $60 million settlement with the state of Alabama over alleged illegal business practices and a $2 million lawsuit by a Mobile homeowner who claimed that it never treated the home for years.
Alabama state action
In 2019, the Alabama Attorney General’s Office commenced an investigation after receiving numerous complaints from Terminix customers concerning price increases for their termite bonds. These ranged from $320 to $1,499. According to the district attorney, this impacted tens of thousands of customers who could not afford the increases and receive termite protection.
That office engaged in a joint investigation with the state’s department of agriculture and industries. The investigation revealed that Teriminix collected termite protection premiums but did not provide the termite protection services contained in their contracts. This led to termite infestation in many homes and businesses, according to the attorney general.
After customers suffered damages, the company passed on those costs to customers in the state. Renewal rates increased up to 1,000 percent. The company engaged in this practice to make customers cancel their lifetime protection contracts or accept new contracts that provided lower benefits, according to the attorney general.
Terminix also violated its contracts by not performing competent and thorough yearly termite inspections, according to the attorney general. Additionally, customers paid extra money for pesticides that were already purchased and applied to their businesses and homes.
Under the agreement, a $25 million statewide fund will be established to support consumers who were damaged by Terminix. The state will receive another $20 million for consumer protection efforts.
Terminix must also set aside $10 million for treating homes in the three coastal counties which because of these business practices. Another $650 will go to consumers in Alabama who hired another company for termite protection or pay the difference between the services provided by Terminix and the successor company.
A Terminix executive said that a state-sponsored process that is settled out of court resolves damage claim disputes faster. This gives immediate benefits to impacted customers and reduces litigation claims in the future.
Of particular significance, the settlement does not in any way impede or prohibit a consumer’s right to file their own private action, but you may not be able to do both. Attorneys who are familiar with the settlement or termite claims can assist you with identifying the scope of termite infestation, and whether you should or should not make a claim under the settlement. Bear in mind that if you make a claim under the settlement, you could be prohibited from making a separate claim if the claims are similar to the claims you assert in a private right of action. The best advice is to contact an attorney who is knowledgeable about termites before making any claim under the state settlement.