How to Protect Yourself from Solar Panel Scams

The following is presented for informational purposes only.

Owning a home is expensive. Utility bills are expensive. Food is expensive. Property taxes are expensive. Everything is expensive.

So any opportunity to cut costs is worth exploring. And there are few money-saving opportunities more appealing than installing solar panels.

• Reduce your electric bill? Check!
• Good for the environment? Check!
• Potentially increase the value of your home? Check!

Solar panel installation is a booming business, but with every booming business there are people looking to take advantage of the trend.

Recently, the Center for Responsible Lending published a report entitled, The Shady Side of Solar System Installation. The most alarming finding: the sale and financing of solar products has more than a few problematic similarities to the subprime home loan boom that led to the massive financial collapse of 2008.

Another way to put it: unscrupulous salespeople are using the allure of solar power and all its benefits to stick homeowners with loans they can't afford for often overpriced products that don't always provide the savings that were promised.

So while solar power is generally a good thing, the people going door-to-door to sell you solar panels don't always have your best interests in mind. Keep the following potential scams in mind before agreeing to install solar panels.

High-pressure sales tactics

Scammers often use aggressive sales techniques to pressure homeowners into signing contracts quickly without thoroughly reviewing the terms. They may claim that the deal is a "limited-time offer" or make promises that seem too good to be true, like huge savings on energy bills.

This can be especially effective if the sales person is standing on your doorstep and you're not the sort of person who can easily say no. Don't let the pressure get to you. Reserve the right to do your research.

Unlicensed or unqualified installers

In an emerging industry, it can seem like every company just formed out of thin air yesterday, making it easier for unqualified vendors to slip into the mix.

Some companies may not have the proper licensing or certification but still advertise as experts. They may use substandard materials or perform poor installations, which can lead to costly repairs and reduced panel efficiency.

Always verify the company’s credentials by checking local business licenses and certifications (e.g., NABCEP certification in the U.S.). Read reviews and ask for references from past customers.

Misleading costs

You probably aren't actively shopping for solar panels. So when someone shows up at your door and provides an impressively budget-friendly quote for panel installation, you probably don't have much to compare that to.

Scammers might advertise solar panels as "free" or mislead you with financing options that hide high interest rates or long-term costs. You might end up with a lease or power purchase agreement (PPA) with unfavorable terms.

Read contracts carefully and understand all of the terms, including interest rates and payment schedules. Be very wary of contracts that seem too good to be true. Consult with an independent financial advisor if you’re unsure.

False claims about tax credits and incentives

There are some legitimate incentives out there to entice consumers to invest in green energy, but that doesn't mean you should always believe what you're told without checking into yourself.

Some scammers falsely promise that you'll receive specific tax credits or incentives that either don’t exist or are misrepresented. They use these promises to make the cost of installation seem lower.

Do your own independent research to ensure that any tax credits or incentives are being presented accurately. Speak directly with tax professionals to confirm what credits or rebates apply to your situation.

Phishing or impersonation scams

"I'm here on behalf of Big Energy USA to let you know about a low-cost solar installation program for homeowners in your area." 

Just because someone shows up at your door claiming to be something, doesn't mean they are. Scammers may contact you claiming to be from a utility company or government agency offering rebates or incentives. They may be using the tactic to lower your defenses and get you to agree to unaffordable solar panel financing. Or they may just be using the opportunity to ask for personal or financial information and use it to steal your identity. Not great either way.

Always be cautious when dealing with unsolicited offers of any kind. Don’t provide personal information over the phone or email unless you’ve verified that the request is legitimate. Contact the company or agency directly through an official number or website.

Misrepresenting the quality of the panels

Are you an expert on solar panels? Do you know the terminology? Which are the "good" ones? What they even do??

You're not expected to be an expert, but it's important that you own that lack of expertise. Companies may misrepresent the quality or brand of the solar panels they install, promising high-efficiency models but delivering cheaper, lower-quality alternatives.

To protect yourself, research the specific models and brands of panels being offered. Check for certifications like Tier 1 rankings for quality assurance. Ask for detailed information in writing and compare it with independent reviews or resources.

Solar panels are an investment, and they can be a very good investment. But like any investment, there are risks and costs involved.

If solar power is on your radar, start doing the research on your own. Understand how it works and how much it could reasonable save you. See who offers installation in your area and read reviews. Always get multiple quotes on any installation project. 

And if you're financing the installation, make sure you fully understand every aspect of your financing agreement. 

To quote that report from the Center for Responsible Lending: "Solar financing agreements often leave homeowners in a worse economic situation than before the door-to-door salesperson visited them. This solar debt elevates the risk that the consumer will lose their home to bankruptcy or foreclosure."

So there's more on the line here than just your monthly electric bill.

If you're worried about housing costs and concerned that you may lose your home, MMI offers free foreclosure counseling. Our experts can review your situation and help you take action to do what's best for you and your family.