UNITED STATES OF AMERICA

Federal Trade Commission

WASHINGTON, D.C. 20580

Office of Commissioner

Rohit Chopra

STATEMENT OF

COMMISSIONER ROHIT CHOPRA

In the Matter of Vivint Smart Home 

Commission File No. 192 3060

April 29, 2021

Corporate executives will often go to great lengths to boost sales – often unsustainably – to drive 

up a company’s valuation in advance of selling itself to a new buyer or before going public. By 

incentivizing aggressive sales tactics, this can create the conditions for fraud. 

Today, the Federal Trade Commission is seeking to sanction Vivint Smart Home (NYSE: 

VVNT) for a multi-year scam involving running credit checks on unsuspecting individuals to 

close sales to prospective customers. I agree that Vivint engaged in flagrant violations of law as 

alleged in the complaint, and I believe that Vivint must redress and help its victims. The matter is 

an important reminder that agencies must do more to address the incentives that drive aggressive 

sales tactics and fraud. 

A Pre-SPAC Scam to Pump Up Valuation 

Vivint offers smart home devices and services. Vivint’s products are expensive, so Vivint 

created a financing program where qualifying customers can make payments over time. Vivint 

uses a seasonal door-to-door sales force, which provides compensation only when employees 

make sales. In other words, if employees don’t sell, they don’t get paid. 

In 2012, a private equity fund operated by the Blackstone Group took a controlling stake in 

Vivint Smart Home for roughly $2 billion.1 A few years later, Vivint apparently began to 

position itself to be sold or to go public. Last year, the company went public through a special 

purpose acquisition vehicle (SPAC). At the time, the transaction was one of the largest SPAC 

mergers, with an enterprise value of $4.2 billion.2

What occurred in the interim period between Blackstone’s takeover and going public was a 

disturbing pattern of pervasive fraud that Vivint’s leadership did little to stop, which the 

Commission alleges occurred between approximately 2016 and 2019.3 According to the 

Commission’s complaint, when a prospective customer failed to qualify for Vivint’s financing,

Vivint engaged in a host of fraudulent tactics to help close sales. For example, employees would 

use a tactic called “white paging,” where they would identify another individual with a similar 

1 Michael Wursthorn, Blackstone to Buy Vivint in $2 Billion Deal, THE WALL STREET J. (Sept. 18, 2012), 

https://www.wsj.com/articles/SB10000872396390443816804578004762456374942. 

2 Bailey Lipschultz, Vivint Smart Home Stock Surges After Subtle Public Debut, BLOOMBERG (Jan. 30, 2020), 

https://www.bloomberg.com/news/articles/2020-01-30/utah-jazz-arena-namesake-surges-after-subtle-public-debut. 

3 Compl., Fed. Trade Comm’n v. Vivint Smart Home, Inc. (Apr. 29, 2021).
2

name to that of the prospective customer. The employees would then take that individual’s 

address and list it as a “previous address” of the prospective customer, with the hopes that the 

unsuspecting consumer’s credit report would be pulled and then approved. This is identity theft. 

The salesperson would then close the sale and financing to the customer who initially did not 

qualify for credit.4

Vivint sold or assigned this credit to debt buyers and collectors. These entities would then pursue 

payments from individuals who had no idea their consumer credit file had been used to open an 

account.

Like in the Wells Fargo fake accounts scheme,

5 Vivint knew about the alleged fraud but did little 

to address the problem. It appears that that management turned a blind eye to the scam, because 

the company could pump up its sales figures in ways that would help score a higher valuation 

when going public.

Vivint’s Victims Need Help

Vivint’s misconduct harmed its actual customers and the unsuspecting individuals whose 

identities were stolen. They need help fixing their credit reports, fending off debt buyers and debt 

collectors seeking payments for debt they don’t owe, and obtaining compensation for these 

financial harms.

The Commission has requested that the Attorney General charge Vivint with violating the Fair 

Credit Reporting Act and for selling fake debts. I believe the Commission should have also 

alleged that the company violated the FTC Act’s prohibitions on deceptive practices by 

falsifying credit applications.6I also believe that Vivint turned a blind eye to obvious compliance 

failures by its sales force, which violated the FTC Act’s prohibition on unfair practices.7

The Commission has also proposed a settlement where Vivint must pay $20 million, with $5 

million going directly to Vivint’s victims. Vivint must also take steps to help victims who have 

been harmed.8I am pleased to see that this proposal requires actual help, as it is a departure from 

the FTC’s approach in many matters.9

 

4 The sales representatives also utilized another tactic where they would add a co-signer to the credit application, 

even though this co-signer did not give any consent to apply for credit. See Compl., Id.

5 Emily Flitter, The Price of Wells Fargo’s Fake Account Scandal Grows by $3 Billion, N.Y. Times (Feb. 21, 2020), 

https://www.nytimes.com/2020/02/21/business/wells-fargo-settlement.html. 

6 The Commission unanimously voted to bring deception and unfairness charges in a 2018 case involving falsified 

applications. Compl., Fed. Trade Comm’n v. Tate’s Auto Center et al., 3:18-cv-08176-DJH (D. Ariz. July 31, 2018), 

https://www.ftc.gov/system/files/documents/cases/tates_automotive_complaint.pdf

7 The Commission routinely charges entities with violating the FTC Act’s prohibition on unfair practices when they 

had knowledge of and profited from egregious fraud, but failed to take steps to prevent it from festering.

8 Stipulated Order for Permanent Injunction and Civil Penalty Judgment, Fed. Trade Comm’n v. Vivint Smart 

Home, Inc. (Apr. 29, 2021).

9 For example, in a recent matter involving fraudulent debt collection practices, the FTC’s approach to settlement 

resulted in victims receiving almost no help at all. See Statement of Commissioner Rohit Chopra regarding Midwest 

Recovery Systems, LLC, Fed. Trade Comm’n File No. 1923042 (Nov. 25, 2020), https://www.ftc.gov/publicstatements/2020/11/statement-commissioner-rohit-chopra-regarding-midwest-recovery-systems-llc. In another 

recent matter involving shoddy tenant screening practices, the FTC’s resolution failed to provide harmed renters 
3

However, I am more skeptical of other settlement terms, such as requiring independent 

assessments and the appointment of a chief compliance officer. While in some circumstances, 

these measures can be useful, in this matter, they will simply generate paperwork rather than 

correct the management deficiencies that led to the fraud.10

Other remedial approaches are likely to be more effective and lead to more meaningful change. 

Clawing back executive compensation and requiring changes to incentive compensation for the 

sales force are also well suited to shift leadership incentives to guard against fraud. In many 

cases, other changes to corporate governance are appropriate. For example, to address Wells 

Fargo’s failures in its fake accounts scandal, financial regulators sought and obtained dismissals 

of senior managers who allowed the fraud to fester.11

Enhancing Enforcement Credibility

The FTC is currently battling its most serious credibility crisis in decades. Too many of the 

agency’s enforcement actions provide no help whatsoever and do nothing to deter misconduct.

This action is a step in the right direction, as victims will actually receive help.

Across the agency’s work, Commissioners must do more to address the financial incentives that 

fuel wrongdoing, particularly when it comes to misuse and abuse of personal data. The 

Commission’s status quo approach to data protection enforcement is not working,

12 and 

Commissioners will need to continuously examine ways to work with partners to better detect, 

deter, and prevent abuse by bad actors.

 

with help. See Dissenting Statement of Commissioner Rohit Chopra Regarding AppFolio, Fed. Trade Comm’n File 

No. 1923016 (Dec. 8, 2020), https://www.ftc.gov/public-statements/2020/12/dissenting-statement-commissionerrohit-chopra-regarding-appfolio.

10 The Commission should commit to making much of this paperwork public, consistent with applicable law.

11 Press Release, Office of the Comptroller of the Currency, OCC Issues Notice of Charges Against Five Former 

Senior Wells Fargo Bank Executives, Announces Settlement With Others (Jan. 23, 2020), 

https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-6.html; Press Release, Bd. of Governors of 

the Fed. Reserve Sys., Responding to widespread consumer abuses and compliance breakdowns by Wells Fargo, 

Federal Reserve restricts Wells' growth until firm improves governance and controls. Concurrent with Fed action, 

Wells to replace three directors by April, one by year end (Feb. 2, 2018), 

https://www.federalreserve.gov/newsevents/pressreleases/enforcement20180202a.htm. 

12 Despite the Commission’s track record, Commissioners can and should implement a series of corrective actions to 

make the agency’s privacy and data protection enforcement more credible. See Statement of Commissioner Rohit 

Chopra Regarding the Report to Congress on the FTC’s Use of Its Authorities to Protect Consumer Privacy and 

Security, Fed. Trade Comm’n File No. P065404 (June 18, 2020), https://www.ftc.gov/publicstatements/2020/06/statement-commissioner-rohit-chopra-regarding-report-congress-ftcs-use-its.