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And, with marketing fueled by $30 million a year in advertising -- who can forget the commercials with the bug crawling across TV screens? -- Orkin is by far the best-known name among pest terminators. Orkin's founder, Otto Orkin, was a shameless self-promoter who would have his name paged at train stations -- just so people would hear, and he hoped, remember the word "Orkin." Nowadays, more sophisticated touting of the Orkin brand has paid off with about 70 percent of Americans recognizing the name.
Then there's the other Orkin.
It's a company that in 1984 was cited by the Federal Trade Commission for unfair trade practices. According to the FTC, Orkin had connived to breach its agreements with 232,969 customers when it unilaterally raised its fees by as much as 40 percent after promising customers the cost of contracts "never increases." In a 1980 memo obtained by the FTC, Gary Rollins brushed aside his company's pledged word and the interests of his customers in exchange for the potential of $2.3 million in increased profits. The FTC ordered Orkin to stop the practice. Orkin appealed, but a federal court in 1988 upheld the FTC finding.
It's a company that three years ago settled with North Carolina, Florida, New York, Ohio and Texas. Those states' attorneys general successfully argued that Orkin's advertising misled customers into believing termite treatments were "certain" to be effective. Orkin also had altered its contract to insist on expensive, commercial arbitration rather than more informal dispute settlement or litigation -- but had not made that change clear in its literature.
"Orkin will now be forced to back any claims of guaranteed results," New York Attorney General Eliot Spitzer said at the time. "Consumers will now be able to pursue legitimate damage claims against Orkin more easily and effectively."
Orkin is also the company that faces arbitration disputes and lawsuits in many of the 49 states where it does termite eradication (the critters shun Alaska's frosty climate). The front line for Orkin's problems is the "termite belt" of the South, where 65 percent of its problem customers live.
One of those customers' names has become the "remember the Alamo" in Orkin litigation. In 1977, a poor, largely uneducated Alabama woman named Artie Mae Jeter purchased a "lifetime" contract that provided for up to $100,000 in termite repairs for damage that occurred after the agreement was signed. Orkin repeatedly inspected Jeter's modest home and just as repeatedly told her there was no damage.
As Alabama Supreme Court documents state: "Orkin had in place a policy pursuant to which an inspector could not inform a homeowner of any termite damage to the home." Which, of course, meant the company could avoid paying repairs.
The termites, meanwhile, were having a feast. One Orkin inspector determined repairs would cost between $16,800 and $28,826. The company told Jeter the damage was caused by moisture, but being a good sport offered her $400.
An Orkin manager's memo that became the linchpin in the case states: "Ms. Jeter is 78 years old, black, in poor health, no money. ... Her house was improperly treated, we sold her twice with no documentation of existing conditions, home is badly eaten up by termites to the point of breaking apart. ... [W]e can spend $5,000 now and have her put in small claims over the years until she dies and her children sell the house, or if any attorney get[s] involved, we will probably buy her a new house, thousands in punitive damages and attorneys fees."
Rather than, as Gary and R. Randall Rollins told their shareholders, acting with "honesty and integrity as an integral part of the way we do business," Orkin offered Jeter another $4,660 -- but still didn't disclose the extent of damage.
In 1999, Jeter sued, but died before the case went to trial. Her children carried on, and a jury awarded them $800,000 in compensatory damages and a staggering $80 million in punitive damages. The Alabama Supreme Court later reduced the total award to $2.3 million, which ended the case.
Jeters' heirs aren't the only ones to tally huge wins. Judgments from arbitration and litigation have started to climb into seven figures. Even more threatening to the company are attempts in Florida, Georgia, Alabama and other states to transform the individual cases into "class actions" where Orkin would be sued by hundreds of thousands of its 1.6 million customers.
The potential claims against Orkin and other termite control companies are daunting. Termites cause more than $2 billion a year in damage, and much of that is to homes and businesses whose owners believed they were protected and pest-free.