Are Our Termite Guarantees Worth The Paper They're Printed On?

The past two years have seen a flurry of activity regarding the termite control industry. Although the prospects were good for some significant changes within termite business practices, reputable termite control companies saw very few changes that affected their livelihood. On the other hand, consumers unwittingly have drawn the short straw.

The United States Environmental Protection Agency had a great opportunity to fix several things that were “broken” within the termite industry, but due to industry pressure and/or EPA’s lack of knowledge, they did little to benefit either the industry or the consumer. Simply stated, EPA, by requiring minimum label application rates for preconstruction treatments, only minimally raised the standard of the industry. EPA (and thus termiticide labels) remained mute regarding post-construction treatment. Furthermore, EPA failed to reexamine its efficacy standards for termiticide registration. EPA also did not reconsider current labeling which only permits retreatment if there is evidence of termite activity or disruption of the barrier.

QUESTIONABLE FIVE-YEAR DATA. An overwhelming amount of research, including USDA’s Gulfport studies, unquestionably demonstrate that in some locations the currently registered termiticides do not last five years when exposed to the environment. So why require five-year efficacy data which only gives a false sense of security? I can only imagine the day when the EPA is named as a codefendant in a lawsuit for termite damages. The PCO could reasonably assert that it followed the label (the law), which sets minimum treatment standards using a product that is registered (of course, not approved) by EPA (a registration which is contingent upon submitting five-year efficacy data).

Almost two years ago grave concern was expressed within our industry about the Federal Trade Commission (FTC) and 28 states attorney general (give or take a few) who were investigating termite control practices within the industry. The focus of the investigation was consumer fraud. Today little has changed — the FTC made a few inquiries of a few companies but with little consequence.

In the Maryland, Virginia and Washington, D.C. areas, it’s business as usual — pretreats for $0.05 per square foot and termite treatment guarantees with holes so big you could drive a freight train through them. I must admit that a few companies in the area did raise their pretreat prices to $0.15 per square foot. I have spoken with builders who were upset and called to complain about the increase in price. Most builders were still interested in getting the lowest price possible but felt much better about $0.15 per square foot when they learned that the COST of the materials to do by-the-label pretreats was $0.25 to $0.30 per square foot. The builder’s bottom line is to meet code by having the pretreat done. For most builders, it doesn’t matter how much termiticide is put down as long as a pest control company will issue a pre-treatment certification and guarantee.

UNFAIR BUSINESS PRACTITIONERS. The rationale for the lower prices offered by the small element within our industry referred to as the “low ballers” is that they’ll make it up on the renewals. I know of no other service industry that uses this foolhardy business strategy. My take is that “low ballers” don’t apply enough termiticide to establish a barrier and they bet on the unlikelihood of demonstrable termite activity within the first five years of construction and that the home will be sold within that time period.

When the property transfers the buyer typically is unaware of any guarantee and therefore “allows” it to lapse. Should termites appear this affords the unscrupulous company, which should have done the job right the first time, an opportunity to sell a post-construction treatment or simply to walk away with no obligation to the homeowner.

Guarantees are not the exclusive domain of the pretreat market; charlatans in the post-construction termite treatment market are equally guilty of empty guarantees and warranties. Recently, a company canvassed neighborhoods in the Washington, D.C., area offering a 10-year pest management program that covered ALL pests, including termites if the customer was willing to pay an extra premium.

The average contract was written for about $800 (and that’s NOT per year). If it is too good to be true, then it generally is. And to the hundreds and possibly thousands of customers who bought the program, it was. Less than a year after offering this great deal with unlimited damage guarantees, this licensed pest control firm declared bankruptcy (at least on paper), and their customers have no guarantee and no recourse. Unfortunately, their customers were left holding the bag and will think twice about calling another pest control company.

VARIOUS GUARANTEES. Recently I reviewed several termite treatment/repair/damage guarantees. Some are very solid and I know from reputation the companies stand behind them, although they rarely have to because rarely (if ever) do they have claims. Other guarantees are not worth the paper it took to print them. Probably one of the worst guarantees is based upon the homeowner having all existing termite damage repaired for the guarantee to be valid. Another guarantee covered repairs of termite damage that occurred subsequent to treatment. Considering the first guarantee, it is unlikely that a homeowner can have all existing damage repaired. The second guarantee offers little more, because it is extremely difficult to determine when damage occurred and claims end up pitting the homeowner against the company.

The major issue that prompted me to question the need for guarantees in the termite industry is the recent action taken by two governmental agencies. The Department of Housing and Urban Development (HUD) and the Veterans Affairs Administration (VA) have been the stalwarts of termite pretreatment guarantees — that is, until recently. Other than a limitation on treatment around wells, the five-year preconstruction termite guarantee was the only construction industry standard specified by these two organizations.

About one year ago, NPCA collaborated with HUD and the VA to shift the burden of the guarantee for termite control to builders, whose only standard was typically low price. This was a great move for our industry because we have little control over the construction site after application. In less than a year this house of cards has crumbled and HUD/VA is now only requiring a one-year guarantee. I can only imagine that the housing industry lobbied very hard to have the five-year guarantee rescinded.

If one year is all the homeowner gets, my question is why do we even have a guarantee? There is a 99.9% chance that termites will not be found in new construction after one year. What good does it do to offer a homeowner a meaningless guarantee? Why not treat termite control just like general household pest control? Simply state that for a fee, we will get rid of your bugs, in this case, termites. Guarantees and warranties are used by many companies to gain a competitive edge, and there is nothing wrong with that as long as they are not fraught with loopholes that protect the company more than the homeowner.

I know I’m preaching to the choir. Most of the companies this article refers to don’t read trade journals and since they are fundamentally unethical and could care less about labels, FTC, HUD, etc., they care even less about their business practices. As an industry we must work together to rid ourselves of these unsavory elements which drag the entire industry down. This may mean we have to embrace greater scrutiny of the termite industry by state regulatory officials, encourage stronger examination of business practices by organizations such as the FTC and support stronger regulations and labeling for termiticide products.

Those companies which provide termite management services, whether it is traditional soil applications or baiting, and stand behind their service and their guarantee (if offered), have nothing to fear from more scrutiny and control. Fear and lack of support for these changes allows the unscrupulous companies to lower the standard for everyone and squeeze more and more good companies out of the business. Unfortunately, these unscrupulous companies also dilute the efforts of the National Pest Control Association to launch a major public awareness campaign focusing on the benefits of our industry, which certainly spans more than termite control to consumers.

Dr. Richard Kramer is president of Innovative Pest Management and can be reached at 301/570-7138.