Attorney General Schwalb Warns DC Residents About Predatory Practices in the Home Solar System Industry

Attorney General Brian L. Schwalb today issued a Consumer Alert to help inform District residents about predatory practices in the home solar system sales and loan industry.

Because federal tax credits for residential solar systems are ending at the end of 2025, residents may see an uptick in high-pressure sales tactics by salespeople for the home solar system industry. The Office of the Attorney General (OAG) has also learned that solar system companies are targeting residents in Wards 4, 5, 7, and 8, including low-to-moderate income homeowners, seniors, and residents who do not speak English as their first language. Companies may exaggerate the benefits of installing a solar system and fail to disclose risks-including the risk of losing your home if you cannot make payments on a loan you take out to pay for the system.

"District residents should be on high alert that some home solar system companies use misleading, high-pressure sales tactics to get them to sign predatory contracts," said Attorney General Schwalb. "While adding solar panels can be the right decision for some homeowners, they are a major financial commitment and do not always deliver promised savings. Sometimes homeowners get stuck paying off a loan for decades without seeing energy savings-and in the worst-case scenarios, can lose their homes if they can't make loan payments. I encourage DC residents to report any deceptive or misleading sales tactics or other issues with home solar companies to our Office of Consumer Protection."

CONSUMER ALERT: PREDATORY PRACTICES IN HOME SOLAR SYSTEM SALES & LOANS

As utility costs go up, and the cost of daily living increases, consumers are understandably looking for ways to make ends meet. Installing solar panels at home can seem like a good way to save money on energy bills. However, signing up for a solar system is a big commitment and it may not provide the savings that consumers are promised.

Solar systems can cost tens of thousands of dollars and the loans to pay for them can last decades. Experts warn that taking out a solar loan can leave some homeowners worse off. It also can increase the risk that the home is lost in bankruptcy or foreclosure if a homeowner is not able make payments on the loan.

Before signing any contract, homeowners should make sure they understand the commitment they are making. If you are considering a home solar system, it is especially important to find out 1) the total cost, including any interest rate costs, monthly payments, and fees; 2) the actual energy savings, if any; 3) what happens if a homeowner cannot make loan payments on time.

How Do Home Solar System Sales Work?

There are usually three parts of a solar system sale - a salesperson, at least one installer and/or contractor, and a company that finances the loan to purchase and install the system (unless the consumer is paying cash upfront). Salespeople often go door-to-door to sign up homeowners. These salespeople usually work with a loan company. After a homeowner signs a contract to purchase a home solar system, contractors install solar panels and solar equipment. If consumers cannot pay for the solar system up front, they can take out a loan. Typically, a separate company provides the loan.

What Should I Look Out For?

OAG has received reports of multiple issues with home solar system sales and installation in the District. Here are some issues to look out for:

• Misleading and aggressive sales moves. Salespeople often go door-to-door, asking homeowners to sign up for a solar system on the spot. They may falsely promise that a homeowner qualifies for a "free" system or that federal tax credits will pay for the system. Salespeople may also hide information about the actual energy savings or say that there is an offer for just one day. Be cautious if a sales pitch seems too good to be true, or if someone is pressuring you to make a big decision on the spot.
  
• Deceptive installers and bad construction. Salespeople and installers may try to upsell homeowners by telling them that they must purchase a new roof or electrical equipment before solar panels can be installed. Before signing a contract, find out what company will do the work. Check and see if the installers have the licenses needed to work in the District. Make sure the contractors are reliable and that you are not being tricked into buying things you do not need.
  
• Predatory contracts and false promises. Salespeople may promise consumers big savings from solar systems, but it can take a very long time to see savings that cover the costs of buying and installing a system-and some consumers never see any savings. A salesperson may offer what looks like a low-interest loan, but lenders may add hidden fees and "dealer fees." Because of interest and fees, some homeowners do not get back the cost of the system through energy savings or tax credits. Additionally, the terms of some solar loans mean that if you are unable to make loan payments, you can risk foreclosure, bankruptcy, or even losing your home. Even if you can pay cash up front, make sure you understand the actual energy benefits and the time it will take to see savings.
  

Tips for Residents Interested in Home Solar Systems

DC residents interested in home solar systems should not be pressured to make quick decisions. Instead, make sure you have all the information you need to make the best decision for both the short and long term. Here are some steps you can take:

• Make sure you understand the entire contract before you sign anything.
  • Ask for a copy of the entire contract, written in the language you speak.
  • Take time to review the entire contract, and make sure you understand all of it. Go over the contract with a trusted family member or friend.
  • Review the contract for other mandatory terms, such as forced arbitration, or parts that contradict the salesperson's promises. It is important that you fully understand what you agree to before signing.
  • If you plan to take out a loan, make sure you understand what will happen if you are unable to make loan payments on time. This can include losing your home.
    
• Be suspicious of claims that you qualify for a "free" solar system.
  • The DC Department of Energy and Environment (DOEE) has a Solar for All Program. But there are eligibility requirements. Before signing up on the promise of a "free" system, contact DOEE at (202) 299-5271 or [email protected] to make sure you qualify. Do not take a salesperson's word for it.
  • Federal residential solar tax credits do not make the solar system "free." Solar tax credits only offset, or reduce, the amount of a homeowner's federal tax bill. The amount of the offset is based on the homeowner's income. Homeowners that do not pay federal taxes, or who pay only a small amount of taxes, may not get a federal tax credit. Also, based on recent federal laws, the residential solar tax credits will end in December 2025 and will no longer help consumers.
    
• Get information about the total costs of a solar system and the energy savings in writing.
  • Whether you plan to pay in cash or get a loan to pay for a solar system, make sure you understand how long it will take before your energy savings cover the price of the system. Ask the salesperson to provide a written explanation that describes the total cost of the loan compared to the projected energy savings. You should receive this information before signing the contract.
  • If you are thinking about a solar loan, ask if you will be charged a "dealer fee" and get the answer in writing before signing the contract. Make sure you also understand the amount of interest that will be added to your loan, and how much the loan will actually cost, including all fees and interest.
    
• Make sure you do not get overcharged.
  • An average solar system in DC should cost about $3,000 for each kilowatt of power. For example, if you are told that your home needs a 10 kilowatt system the price should be about $30,000 (10 x $3000). If the total cost is much more than that, you are likely being charged a dealer fee or other hidden fees.
  • You can use a solar calculator tool, like the PVWatts Calculator, to see the right system size for your home and research system size prices.
    
• Make sure your contractors or installers are licensed in the District.
  • Before signing a contract, ask for the names of all the companies that will be part of the solar installation and construction. You can use the DC Department of Licensing and Consumer Protection's online system SCOUT to verify if a contractor is licensed to do business in DC: https://scout.dcra.dc.gov/login-32554.

Report Concerns or Unfair Business Practices to OAG's Office of Consumer Protection:

• Call OAG's Consumer Protection Hotline: (202) 442-9828.
  • Calls are returned on the same business day.
  • Calls can be received and returned in any language.
• Submit a consumer complaint online at oag.dc.gov/complaint.
• Email [email protected].

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