Solar consumer protection guide

A home solar installation is a big investment. In dollars, it can be on the same scale as purchasing a new car. Before you spend that kind of money, it’s important to know your rights as a consumer.

Many states have laws that require solar companies to fairly represent the cost and potential savings of a solar installation. There are also red flags to be aware of when it comes to the sales process. Finally, the world of solar financing can be intimidating and full of pitfalls.

If you have a sunny rooftop that’s good for solar panels, none of this should scare you away from going solar - but as with any major purchase or financial decision, it always pays to be an informed consumer. This guide will hopefully offer you some useful and objective advice.

Sales practice abuses plague the solar industry

There are thousands of solar installers in the United States, and the majority of them are honest operators. Unfortunately, there are also a few large national companies that take up a big slice of the residential solar installation market. Some of these companies have been accused of sales practices that violate consumer protection laws.

For example, Vivint Solar (now owned by Sunrun) was sued by the states of New Mexico and New Jersey. According to the Attorney General for New Jersey, Vivint Solar “engaged in deceptive sales practices, failed to deliver promised energy savings, and otherwise violated consumer protection laws in its sales of home solar energy panels in the state”.

They’re not the only one. Sunrun agreed to an out-of-court settlement for telemarketing practices that violated the Telephone Consumer Protection Act (National Do Not Call Registry). It’s the same story for Titan Solar Power. New Jersey also sued and settled with NRG Residential Solar Solutions for “deceptive sales practices to mislead consumers into leasing solar energy panel”, failing to deliver promised energy savings, and “misrepresentations regarding servicing, installation, and financing in violation of New Jersey’s Consumer Fraud Act”.

Federal consumer protection laws

There are consumer protection laws that provide some protection from the sort of predatory sales practices that some solar installers have been accused of.

One federal law is the Federal Trade Commission’s Cooling-Off Rule. This law gives you three business days to cancel certain sales, such as a solar contract, that you signed outside of the seller’s normal place of business. That includes door-to-door sales, telemarketing calls, and temporary locations. For example, Sunrun sometimes does sales inside Home Depot and Costco stores.

The Cooling-Off Rule is designed to protect consumers from aggressive sales tactics that are often used by commissioned salespeople in these settings. If someone comes to your door and pressures you into a sale that you later regret, this law gives you the chance to back out. There are important details: the seller legally must notify you of your right to cancel, and provide you with two cancellation forms and a copy of your contract.

Be sure to read the details of the law to know your rights.

As mentioned, some solar companies have been accused of violating the National Do Not Call Registry. If this happens, you can report the violation at the Do Not Call website. Penalties for violations can be as high as $46,517 per violation.

State solar contract disclosure forms

The last step in hiring a solar installer is to sign a contract with them. Solar contracts can be confusing, and unfortunately unscrupulous salespeople sometimes deliberately make it even harder for consumers to understand them. Here’s an excerpt from the complaint filed by New Mexico:

One consumer noted that when agreeing to the Vivint contract, he was “never shown the full document.” Instead, the Vivint Sales Manager showed the consumer the first two pages of the contract on a tablet, then flipped to the last page to get the consumer’s signature agreeing to the contract. The consumer had no idea that the contract he signed consisted of more than those three pages and he was never provided with a physical copy of the contract or physical copies of the cancellation notice.

This is both unscrupulous and an FTC violation. Several states have taken steps to help make sure that consumers know their rights by requiring solar installers to include disclosures with a contract.

These rules have similar requirements, such as including details about the system design, pricing and financing costs, warranties, the installer’s mailing address and contact information, and more.

• California: Consumers must be given a full copy of their contract, a copy of California’s Solar Consumer Protection Guide, and the CSLB disclosure document (PDF).
• Florida has separate disclosures for leases (PDF) and cash purchases (PDF).
• Massachusetts has disclosure documents for leases (Word doc) and cash purchases (Word doc).
• Nevada has a Renewable Energy Bill of Rights (PDF) that describes the required disclosures.
• New Mexico has a Guide to Solar Financing (PDF) and required disclosures document (PDF).

Check with your state’s consumer protection office, Attorney General’s office, or contractor licensing office to find out what your state may require.

Financing pitfalls: solar loans, leases, and power purchase agreements

When you use any type of financing for your solar panels, you’re really buying two products: a home solar system, and a financing product.

If you obtain a loan from your solar installer, the most important detail to know is that these types of loans usually have fees that are hard to get full details about. Known as dealer fees, they are paid by the installer and added to the price you pay. These fees can be significant: as high as 30% of the purchase price. Because of this, it’s best to always ask the installer for a cash-only price. You should also consider shopping around for your own financing.

Leases and power purchase agreements (PPAs) are popular because they promise you solar panels for no money down. While that may be true, they’re also full of pitfalls, and are one of the reasons why many states require disclosure documents. In general, it’s best if consumers avoid this type of financing, even if it means delaying or not going solar at all.

New York’s Department of Public Service has an example of a solar lease agreement you can check out.

A caveat about price comparison websites

Maybe you’ve used a price comparison website to rent a car or book a hotel. These can be a great way to find the lowest price for a product, so it’s not surprising that there are price comparison websites for home solar installation.

There is a big caveat to be aware of, which is that the prices offered aren’t always the final price you pay. Because consumers will often simply choose the lowest bid offered, some installers will use a lowball price to get you to sign the deal. Once you’ve signed, the installer may then reveal that the system design doesn’t quite meet your needs, and design changes will need to be made that - surprise! - increase the price.

Purchasing a home solar system is a lot bigger financial decision than renting a car. If you want to reduce your chances of getting burned, in general you’re better off researching local solar installers yourself, getting bids and interviewing them, and using those multiple bids to negotiate a lower price. While this is certainly more work than using a price comparison website, the result will usually be better for you in the end.

Watch out for social media ads

Another thing to be on the lookout for when you’re on the internet is ads for solar installation, especially those with sensational pitches such as “Free solar panels!” or “Solar stimulus package just announced!”. The Campaign for Accountability (CfA) points out that these are deceptive ads by lead generation companies: this means that the websites collect your information and sell them to one or sometimes several solar installation companies.

Lead generation isn’t a bad thing necessarily. In fact, that’s how The Solar Nerd makes money! The difference is that my service makes it very clear that you will be getting a quote from SunPower, and there are no sensational pitches about free panels or anything like that.

The CfA advises that social media and Facebook ads are a particular problem, and calls on the FTC to investigate these companies.

Bottom line: solar is great, but make sure you’re an informed consumer

All of this might scare you off from going solar. It shouldn’t! Home solar can be a great financial investment, but like any other major purchase, it pays to be informed. Be sure to read the resources linked in this article. We also have some tips to how to pick a solar company.

A special note if you have elderly parents, neighbors, or a friend: unfortunately there many reported cases of door-to-door and telemarketing salespeople that deliberately target the elderly, and solar installers selling leases are included in these. If you have elderly people in your life, make sure to warn them to be vigilant.

If you think you have a case of fraud, there are some steps you can take. File a report with the FTC’s Report Fraud website. The Better Business Bureau doesn’t have any legal authority, but filing a complaint can often get a company to respond.

Your state may also have an attorney general’s or consumer protection office that you can reach out to. Finally, many states require solar installers to be licensed. For example, solar installers in California are licensed by the Contractors State License Board. Filing a complaint with a licensing board can often help resolve a dispute. In extreme cases, license violations will restrict the ability of a company to do business.