Crackdown on Deceptive Solar Sales Tactics: Guidelines for Staying Clean and in Compliance

On August 7, the U.S. Department of the Treasury announced joint actions with the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) to address increasing consumer complaints regarding unfair and deceptive practices in the residential solar power market. These include high-pressure sales tactics, misleading proposals for financing, and additional unethical behaviors. To protect and educate consumers, these agencies have partnered with the U.S. Department of Energy (DOE) and the U.S. Department of Housing and Urban Development (HUD) with the goal of preventing predatory practices.

The FTC has been stepping up enforcement around energy regulations. According to Mac Murray & Shuster, LLP, the commission partnered with the California attorney general in October 2023 “to obtain a settlement that required a clean energy lender to pay $3 million to resolve claims it deceived homeowners about financing home improvements. Additionally, last year, the FTC fined lead generation firm Solar Xchange $13.8 million for sending out pestering calls to people on the National Do Not Call Registry on behalf of a solar panel company.”

Federal Trade Commission Chair Lina M. Khan stated, “The FTC will keep working with enforcement partners across government to ensure that Americans can unlock the benefits of solar energy without getting ripped off or scammed.”

In an FTC blog article posted August 7, they provide these guidelines for companies selling solar products to consumers:

Every clean energy company has a responsibility to be honest and upfront with consumers. Be transparent about what you’re offering. Disclose the total cost for your product or service, be clear about financing options, and don’t overpromise cost savings that might come through tax credits, rebates, or incentives. Legitimate businesses help consumers make informed decisions about whether powering with solar or clean energy is right for them. So share FTC resources about protecting against deceptive practices, point people to the Department of Energy’s guide for homeowners and commonly asked questions, or share the Department of Treasury’s guidance on clean energy. Remind prospective customers that while tax credits, rebates, and incentives might be available for solar purchasers who qualify, offers for “free” or “no cost” solar panels are scams.

Reputable companies know the importance of being honest about what they’re offering – and how much it costs. It’s not only good business, it’s the law. That’s one lesson from the case the FTC and the state of California brought against Ygrene Energy Fund, a company providing home improvement financing through Property Assessed Clean Energy (PACE) loans. The FTC and California alleged Ygrene deceived homeowners about financing home improvements, trapping them with liens that made it hard to sell their homes. The settlement required Ygrene to dedicate $3 million dollars to help remove those liens placed on without consumers’ consent and provide monetary relief to the people impacted. That’s a reminder to all businesses selling clean energy systems and offering related financing: violations come with a price. And, in addition to existing laws, pay attention to new regulations and initiatives like the CFPB’s Residential Property Assessed Clean Energy Financing Proposed Rule to ensure sensible safeguards apply for consumers seeking PACE and other clean energy loans.

The FTC’s Impersonation Rule is good news for legitimate businesses and consumers, alike. The rule applies not only to government imposters – like those who misrepresent their affiliation with the government and tell tall tales about free or no cost solar energy to make sales – but also to those who misrepresent that they’re affiliated with, endorsed, or sponsored by legitimate businesses. If you spot imposters like these, or scams of any kind related to clean energy systems, tell the FTC.

Chris Wager, attorney at Mac Murray & Shuster, LLP, advises solar lenders and contractors to “closely review their business policies, practices, and agreements to ensure compliance with federal and state laws.” He notes that consumer touch points can occur during telephone solicitations, door-to-door sales, or other in-person contact with a business’s employees, contractors, or vendors. Therefore, it’s critical for businesses “to utilize robust quality control practices to ensure that consumer interactions are consistent with implemented policies and procedures.”

US Department of Treasury “Consumer Solar Awareness”

Consumer Financial Protection Bureau (CFPB) – a report called Solar Financing summarizing problems borrowers experience with solar energy loans and presenting an overview of the most common solar financing business models, with special attention to “risks stemming from the presentation and structure of “solar-specific” loans, which are often facilitated by large financial technology (“fintech”) firms via a point-of-sale partnership with solar installers.”

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