U.S. government warns of predatory practices used by solar panel installers 

More homes across the U.S. have added solar energy capacity in the past few years, making up 55% of new home electricity generation added in 2023 (according to industry data). This boom follows the implementation of a federal tax credit that can be worth 30% of a homeowner’s solar installation costs. A recent report from the Consumer Financial Protection Bureau (CFPB) found that most of these projects were financed, often by non-bank lenders with questionable practices.  

The solar panel installation industry has pounced on the surge in interest, with many sellers using a door-to-door sales model. Dishonest installers can pressure consumers to act quickly, agree to unfavorable terms, and miss out on better offers somewhere else. The CFPB identified four significant risks to consumers when approached by these sellers: 

1. Hidden fees can increase costs by 30% or more. These “dealer fees” are often built into the loan’s principal and not clearly disclosed as separate from the actual cost of installing the system. 
2. Misleading claims regarding the federal tax credit. While there is a federal Investment Tax Credit for residential solar installations, not all consumers will qualify or take advantage of the benefit. Many sellers present loan principals as a “net cost” and subtract from the total tax credit amount they assume the consumer will receive while still charging the consumer the full cost.  
3. Contract terms that allow charges to spike. Some loan agreements may require a prepayment that is equal to the expected tax credit. If the consumer does not receive the tax credit, they would be responsible for the increased costs. 
4. Exaggerated savings claims. Sellers may claim that the benefits of the installation will cover the financing costs or eliminate future energy charges. This may be the case in some circumstances, but actual results can vary widely based on a number of factors typically outside the homeowner’s control.  

If you are approached by solar panel installers, keep the following tips in mind: 

• Shop around. Check competitors for better prices and contract terms. 
• Take your time, and don’t feel pressured to decide quickly. Some door-to-door sellers want you to make a choice immediately without shopping around or reading the fine print. 
• Learn more about the federal Investment Tax Credit. Especially if installation costs are contingent on money from the tax credit, familiarize yourself with key details like who qualifies for the credit, which systems are eligible, and how to claim the benefit. 
• Report suspected fraud to the CFPB and Fraud.org.