Government Acts to Safeguard Home Solar Users from Fraud

urning to solar power could be our ultimate weapon to fight the dual issues of soaring energy prices and the fast-paced climate change. Over the last ten years, the market for home solar systems in the U.S has boomed, thanks primarily to dipping prices and generous government support. But, as solar power gains popularity among homeowners, we're beginning to see a shadowy underside. We're talking troubling lending schemes, misleading sales methods, and dishonest installers.

To shield consumers from unethical practices within the solar market, the U.S. Department of the Treasury, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) have joined forces. For the first time ever, these entities have set in motion a well-rounded campaign to empower consumers, intensify regulatory control, and curb the manipulative acts hindering the growth of this otherwise thriving sector.

The Surge of Solar-Powered Homes

Lately, more and more homeowners across the U.S. are hopping onto the residential solar power trend. Why? Because it gives them a great way to save big on their energy costs. By installing the most efficient home solar panels on their roofs, families can generate an abundant supply of their own electricity, which means less dependence on conventional power companies. Even better, some can make extra money by selling any surplus electricity back to the grid.

As reported by the Solar Energy Industries Association (SEIA), the United States is home to over 5 million solar installations, with a huge 97% of these being on residential rooftops. Right now, 7% of homes in the U.S. are outfitted with solar panels; a figure that's expected to surge past the 15% milestone by 2030.

Source: SEIA/Wood Mackenzie Power & Renewables U.S. Solar Market Insight Q2 2024

The Growing Need for Consumer Protection

As the solar sector grows, sadly so do the chances of dishonest companies taking advantage of customers. Many complaints stem from tricky contracts, confusing marketing tactics, and complicated financing plans that leave them worse off. Some solar companies are known for pressuring homeowners into unclear agreements and offering finance deals packed with hidden costs. They often don't deliver on their promises regarding energy savings or system installations, meaning customers are left dealing with high costs and systems that don't live up to expectations.

A recent report by the Center for Responsible Lending (CRL) draws worrying parallels between certain activities in the solar sector and those that triggered the subprime mortgage crisis. It turns out, certain firms are specifically targeting low-to-moderate-income consumers with the promise of the cheapest solar solutions, only to lure them into questionable financing agreements. These practices not only harm individuals, but also undermine the overall adoption of solar energy by shaking the public's trust in the industry.

Government Response: Safeguarding Consumers from Solar Scams

Tackling the worrisome trends head-on, the Treasury, CFPB, and FTC have kicked off a string of measures that protect consumers from harm. Their aim is to democratize access to the advantages of solar energy for all across the States without any danger of financial trickery.

1. Guidance & Insight for Solar Consumers: An integral part of the government's action plan is the publication of thorough user advisories by the Treasury, CFPB, and FTC. With these detailed guidelines you'll have all the knowledge you need to identify and sidestep potential scams. They will walk you through everything: solar financing options, warning signs, and proactive steps you can take when diving into solar purchases.

The advisories also serve as a reminder for consumers that they can and should report suspect practices to the CFPB, FTC, or their local consumer protection office. These agencies rely on your complaints to pinpoint and take action against the wrongdoers, and your action could save numerous consumers from being victimized further. You can visit FTC’s ReportFraud.FTC.gov to drop your complaint, or use CFPB's similar platform at consumerfinance.gov/complaint. If you need extra help, state consumer protection offices and not-for-profit legal services are there to help you with dispute resolution and seeking justice.

2. United Agency Effort: Beyond consumer guides, the Treasury, CFPB, FTC, Department of Energy (DOE), and Department of Housing and Urban Development (HUD) have established a unified partnership. This alliance aims to boost cross-agency interactions and coordination. This partnership is about fine-tuning the way the government tackles unfair business practices in the solar industry and making sure every agency is co-operating to protect the consumer's interest.

This partnership will boost information flow between agencies, which will help efficiently curb fraudulent activity in the solar market. Their goal is to pool resources and expertise to develop a powerful regulatory system that can keep track with the fast-growing home solar sector.

3. Enforcement Actions: The authorities are pretty serious about ensuring solar companies don't get away with deceptive tactics. Especially, the Federal Trade Commission is diligent in taking action against businesses found guilty of dishonest practices. Recent cases show hefty fines for companies that were found misleading  consumers or breaking consumer protection laws.

It's also on the CFPB's radar to thoroughly scrutinize solar lenders, making sure they're in line with federal regulations and providing consumers with transparent, just financing options. The bureau has sent out a warning that it will take measures against any lenders found to be involved in deceptive or predatory behaviors.

Getting Ready for Solar: What You Need to Know

Considering the risks, being cautious is key when deciding on solar energy. Here are some federal guidelines to help you spot a good solar company and dodge any deceitful practices:

Dig Deep: Don't rush into a deal with the first solar firm you find. Do a bit of homework. Check out several providers, compare their deals, look up solar company reviews, and verify if any complaints have been lodged against them with the local consumer protection agencies.

Scrutinize Budgeting Choices: If you need a loan, consider taking one from your bank or credit union. Don't depend entirely on the financial options offered by the solar company. Make sure to request a detailed breakdown of all fees and costs related to the loan.

Seek an Independent Energy Audit: This is a sure-fire way to to estimate your solar panel needs and understand how much you can gain from a solar system. Since these auditors are not linked to any solar companies, you can rely on their advice to be neutral and fair.

Focus on the Fine Print: Take the time to go through every clause in contracts and loan agreements before inking your signature. Make sure you get the full picture - be it possible upticks in payments or the total solar panel cost over time.

Know Your Rights: Don't forget, you are legally allowed to cancel certain door-to-door sales agreements within three days of the deal. If you're feeling rushed, it's completely okay to take some time to think things over and seek legal advice if necessary.

Ending Notes & Your Info Arsenal

More and more people in America are choosing solar panels to shave off their utility bills. It's important for them to feel confident in this decision, knowing they're supported by strong consumer protection measures. The efforts led by the Treasury, CFPB, and FTC, along with their federal partners, play a key role in making this possible.

Deputy Secretary of the Treasury Wally Adeyemo highlighted the importance of this initiative, stating, “While the skyrocketing growth of the residential solar industry is lowering costs for consumers nationwide, a small number of bad actors are taking advantage of opportunities to scam customers. By providing new information to consumers interested in solar power for their homes and coordinating across federal agencies to prevent scams, the Biden-Harris Administration is helping to ensure consumers who want to lower their utility bills are able to successfully do so.”

Check out the vital resources below to boost your knowledge and confidence as a solar energy consumer:

Consumer Solar Awareness Website:  https://home.treasury.gov/policy-issues/consumer-policy/consumer-solar-awareness

Solar Consumer Advisory: https://home.treasury.gov/system/files/136/Consumer-Advisory-Solar-eng.pdf

Before You Buy Solar Panels: https://home.treasury.gov/system/files/136/Guide-Before-You-Buy-Solar-Panels-eng.pdf

Before You Sign a Solar Lease: https://home.treasury.gov/system/files/136/Guide-Before-You-Sign-a-Solar-Lease-eng.pdf

Before You Sign a Power Purchase Agreement: https://home.treasury.gov/system/files/136/Guide-Before-You-Sign-a-Power-Purchase-Agreement-eng.pdf

Before You Sign a Solar Subscription: https://home.treasury.gov/system/files/136/Guide-Before-You-Sign-a-Community-Solar-Subscription-eng.pdf

You can also look into further info from the FTC:

For consumers: “How To Avoid Getting Burned” https://consumer.ftc.gov/consumer-alerts/2024/08/how-avoid-getting-burned-solar-or-clean-energy-scams

For businesses: “Not Wasting Your Energy On a Solar Scam” https://www.ftc.gov/business-guidance/blog/2024/08/dont-waste-your-energy-solar-scam

Lastly, consider the resources from the CFPB:

Issue Spotlight: https://www.consumerfinance.gov/data-research/research-reports/issue-spotlight-solar-financing/

Consumer Advisory: https://www.consumerfinance.gov/about-us/newsroom/consumer-advisory-steer-clear-of-costly-and-complex-loans-for-solar-energy-installation/

Recent Developments in Solar Consumer Protection in the USA

In 2024, the United States continues to see significant growth in the residential solar market, with more than 5 million solar installations across the country. However, this rapid expansion has also led to an increase in fraudulent activities targeting consumers. To address these concerns, the U.S. Department of the Treasury, the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC) have intensified their efforts to protect consumers from deceptive practices in the solar industry.

This collaborative initiative aims to provide comprehensive guidance to consumers, enhance regulatory oversight, and enforce actions against fraudulent companies.The federal agencies have launched a series of measures to safeguard consumers, including publishing detailed user advisories to help identify and avoid scams. These advisories cover various aspects of solar financing, highlight warning signs, and offer proactive steps for consumers.

Additionally, the Treasury, CFPB, FTC, Department of Energy (DOE), and Department of Housing and Urban Development (HUD) have formed a unified partnership to improve cross-agency coordination and tackle unfair business practices effectively. This partnership seeks to create a robust regulatory framework that can keep pace with the rapidly growing solar sector, ensuring that consumers can confidently transition to solar energy without falling victim to financial deception.

Sources:

https://home.treasury.gov/news/press-releases/jy2522

https://www.seia.org/5M