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National Marketing Scam Threatens Licensed Contractors and Consumers

By Evan Conklin posted 07-10-2012 11:19

  

National Marketing Scam Threatens Licensed Contractors and Consumers

 

Though the internet provides a wealth of benefits and possibilities for contractors, it also makes it easier for unlicensed contractors to publicize their services and deceive unsuspecting consumers. I recently sent a letter to the California Contractor Licensing Board about a marketing company that has posted over 25 fake plumbing company websites and hundreds of supporting back-links and directory listings for these sites. None of the businesses are registered in any city or state. None have any physical presence. When unsuspecting consumers contact these fake sites, this company sells the generated leads to every unlicensed guy that is willing to pay $50.

If these websites get traction, we can all just go home— this unethical business model is devastating to existing legitimate plumbing businesses and a serious consumer fraud issue. The company and countless others like it seek to redefine the plumbing industry as an internet website. Contractors had better pay attention to this issue - or we will be sorry! It is time contractors and homeowners started raising awareness and taking action against these fraudulent services and companies.

 

The Business Model

 

First, the marketing company fabricates businesses on the Internet by creating websites that appear to be locally-owned and established in a specific city—just about anywhere contractors are willing to pay for leads. The company focuses on fake plumbing and HVACR businesses as the pay-per-lead potential is higher than most other trades.

Second, they promote the services heavily with search engines and online directories to effectively imitate a real business in the target area. Once the fake website develops enough traffic, the marketing company can sell, rent or lease the website to others. The potential clients in this scam include anybody seeking plumbing customers in that particular geographical location who is willing to pay for individual leads or a monthly fee—mostly unlicensed contractors. The standard cost per lead is approximately $50 for companies that utilize this business model. My company receives many calls from these “lead generators” offering to send me customers for $50 each, $300 a month or $3,000  a year.

The advertising from these websites facilitates the evasion of license transparency. Furthermore, the websites do not promote the service as an agent or directory service – they are counterfeit plumbing company advertisements that are not actually associated with an established or licensed plumbing business. These sites provide no business registration, no contractor license and no way for the consumer to know who placed the advertising or who shows up to perform work in their home. So although this scam could be utilized by licensed contractors and businesses that simply wish to increase their marketing presence and generate new customers, it is vastly more attractive to the unlicensed contractor.

 

A Danger to Consumers

 

This company and others like it tend to target regulated industries—like plumbing and HVACR— because they generate higher service costs for the consumer and it is assumed that these leads for regulated services are worth more. The fake business websites effectively disconnect the licensing requirements from advertising. Even worse, they provide immunity to contractors that wish to anonymously provide services without the license, bonding and insurance required by law. Consumers are often unable to tell the difference between these slick plumbing company ads and legitimate local businesses.

The phone numbers for these fake businesses are all owned by the individual who runs this marketing company. All calls go to this individual, where he can control the incoming lead—how these calls are handled on a case-by-case basis is anyone’s guess. No homeowner would call if they suspected that they were not calling the plumber directly. Typically they harvest the calls and then attempt to find contractors—mostly unlicensed—to pay them for the hot “lead.”

 

What’s Next?

 

Last year, the company was served with a cease-and-desist notice for promoting a fake plumbing company that infringed upon a registered US trademark. The company’s response? They changed the domain name registrant information on the offending domain to an alias and changed the contact address to one that did not exist. The company subsequently altered many other domain name registrations in a similar manner in order to hamper legal inquiries and evade any culpability for these illegal and unethical behaviors.

The websites created by this company are graphically impressive and function with local phone numbers. To date, no license or law enforcement agency has opposed their development. This oversight, coupled with intensive efforts to promote these websites in local markets, has made these websites highly visible. Though we do not have data about the overall effectiveness of this scam, the infrastructure is in place for an epidemic of consumer fraud.

 

 

Additional Comments

The proliferation of false advertising by so-called marketing companies promoting plumbing services in virtually every city in the country has had a dramatic effect upon the licensed plumbers and legitimate small businesses.  It is estimated that 80% of all residential plumbing services in Seattle are performed by unlicensed “pretend plumbers.”

Many small brick and mortar shops have closed since the economic downturn caused not by lack of business skill or the economy as the plumbing service business has always been relatively recession-proof and not dependent upon new construction. The problem is the shift to the Internet as the consumers’ primary source for locating local services has been corrupted to the point where there are more scams than legitimate businesses.

In Washington State, for example, there are 1,500 registered plumbing contractors but 559,000 plumbing company links. There are 5,400 licensed plumbers and trainees in Washington but 54,500 links to plumbers in just Seattle only.

A Call to Action by Legitimate Plumbing Companies

The PHCC membership is in a unique position to get some attention focused on this issue. There are only three potential interested parties:

  1. The residential plumbing contractor
  • There has been no organized complaint or defensive actions to date in spite of the fact that many of us have been driven out of business due to the unfair competition from false advertisers.
  1. The consumer
  • The consumer is fast asleep and is not aware that plumbers even need to be licensed. The fly-by-night operators contribute nothing of real value to the consumer/plumber relationship. Who really thinks it is a good idea for an out-of- state marketing company to get between a homeowner and a local plumber?
  1. Law enforcement
  • The state Attorney General should be treating this issue as a false advertising issue that is contributing to the underground economy and defrauding both small business and the consumer.
  • The individual state plumber licensing agencies should be demanding simple take-down of fraudulent websites and telephone numbers of overtly unlicensed advertisers.
  • The FTC has federal false advertising laws – they should be aggressively hampering this type of marketing as it is corrupting an entire industry by allowing substitutes for licensed tradesmen that supposedly are regulated
  • If the government demands that we be licensed, then we have the right to have protection of the value of the licenses.

 

Every plumber and plumbing contractor should do their part to bring attention to this issue at the local, state and federal level of government. The agency bureaucrats tell me that nobody is complaining. Well, it is time to start unless you want to be paying hundreds of these I-want-be marketing companies to get your phone to ring.

 

When you spot a local false advertisement for a fake pluming company, you need to do whatever is necessary to get the ad and/or website removed. Call your local state license enforcement agency and file a formal complaint. Send a copy to you attorney general and a copy to the FTC. Contact your local senator and tell them you need help if your state doesn’t have an effective program to enforce plumber licensing and false advertising. This is a fraud issue, not just a licensing issue. If the truth be told, nobody really cares about licensing of plumbers except the agencies that collect the fees. The hook for the legislators and the consumers is the fraud.

 

It is my belief that if this issue doesn’t get some visibility that most of us will not be here a couple years from now and those of us that are left will be spending 10X or more for any visibility on the Internet. It isn’t free anymore.

Resources and Legislative Updates

 

www.badplumbers.org

 

http://www.badplumbers.org/wa-unlicensed-plumber-legislation-sb6476/97-consumer-protection-legislation-2013

Sample False Plumbing Company Websites: 

http://www.24houremergencyplumberanaheim.com/

 

http://www.sacramento-plumber.net/


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10-08-2013 15:33

We have the same problem here in Florida. Started with the Medical and Attorney referral services and now they have plumbing referral services. They are looking for water restoration jobs and are doing a lot of repairs themselves. One company here locally has a site called True Plumbers and is attached to all the google ad words for plumbing. They are not a Licensed Plumbing company yet they have vans advertising True Plumbers.They do have a legitimate company called True Builders which is a mold remediation and water extraction company.When they couldn't get plumbers to refer business to them they started True Plumbers referral service. Its a big problem as you can tell. We have laws in place to prevent this but no enforcement. However two Sheriff Detectives from Sarasota County have put together a program that ties Code enforcement, local police, Sheriffs Dept., Dept of Insurance, Dept of Agriculture(telemarketing) Div.of workers compensation, Dept of Business Professional Regulation and States Attorney's office. They are going statewide with this program but it will take some time.1st offense with a fine puts them in the database and second puts them in jail. All local depts across the state will have this info so no matter where they go if they're in the data base they can be prosecuted. The response from law enforcement has been good. Its a slow process but we are moving forward. Anything I can do to help fight unlicensed activity count me in. Sam Garber Samco Plumbing Inc. Lakeland, Florida. Proud member NAPHCC, FAPHCC and PCPHCC.