The Google Guarantee-LSA Scam in Home Services: A Marketer's Insight

In this 13 minute video we interview Zach Dotson, a marketer in the home services space who confronts Google Local Service Ads fraud every day. He describes the impact on not just the customers but on his business as well.

The following is a lightly edited transcript of the discussion.

Mike B (00:00)
This is Mike Blumenthal with Near Media, and I'm here today with Zachary Dotson, a marketer in the home services area who has been paying a lot of attention to the Local Services Ads-Google Guarantee scam. Introduce yourself and tell us a little bit about what you do and your experience with this problem.

Zachary (00:27)
My name is Zachary. I do marketing for air duct and AC stuff in Florida. We've been running Local Services Ads for about a year. I would say since August, September, so like five months or so. We've been seeing a lot of these fake companies pop up that have stolen profiles and stolen licenses. It's kind of made it a lot more competitive than it should be, but in a fake way. And they cost us a lot of business, cost a lot of people a lot of money that paid to have a service done and the service either wasn't done or it was partially done. There's a whole load of different stories we've heard from people that have called us that to have us clean up other messes.

Mike B (01:20)
And do you see it mostly in duct cleaning or in other HVAC areas?

Zachary (01:25)
Mostly the duct cleaning. We do duct and AC cleaning. Usually if we're coming there and the ducts are nasty, a lot of times that means your AC unit is also nasty. That's what's spreading it in the first place. We hear a similar story every time. We have someone call and they say, "we had someone come out for $99 they stayed for an hour left."

We had our AC service come out and they said, "man, your system's nasty." And the customer said, "I don't know how that could be a thing when we just had guys out here last month to, to fix that." So we see that a lot: a lot of redo work where they realize after the fact maybe it was too good to be true at that price. And a lot of times they get quoted $99 and then the instant this person walks in the door and opens something up, they say, "now this is $1,500."

It's very, very low prices and then it's either not done for that price and it's quoted magnitudes higher or they sit there on their phone and do nothing for the hour and then leave and call it done. And all they did is hook a Shop-Vac up for maybe an hour and left.

Mike B (02:44)
I'm seeing a number of things. In Florida, they frequently use somebody else's business. They use a fake name. Typically, it goes to a call center in Asia someplace. And they obviously participate in bait and switch where they quote $99 and actually charge some ungodly number. So you're seeing all of that in the cases you've been looking at?

Zachary (03:09)
You see that in reviews a little bit. And I've watched some of your stuff where you see it with live with people, but really we hear it a lot more. The folks that are scammed like that, surprisingly, they don't leave negative reviews most of the time. We hear it over the phone with people that call. That's how we hear most of it.

But there's a lot of either fake licenses – not fake – but real licenses that are being used fraudulently. A lot of times there's just no one to track it to. It's a ghost company. We've seen a lot of times where they're using unmarked vans. At one point someone was using our license and pretending to be us through Facebook. We had people booking and say "we had you guys come out" and it's like, no, we didn't, we've never been at that address. They sent us ring camera footage and it's two people and we have no idea who they are. They've shown up in a white van; we don't know who they are.

We contacted the police and tried to set up a fake service at a residential house and then they'd come at the same time and try to catch the people. But no one wants to do that because no one wants to be the people that live at that house and have these two strangers come up – just for fear of retribution.

Mike B (04:37)
Have the authorities responded at all positively in terms of you reporting them?

Zachary (04:43)
No, they don't. We've done the authorities, we've done lawyers. No one really seems to care because there's no one to really chase down. Other than the situation with those two people that we had footage of. In general, it's the Local Services Ads; even if they stole license, if they stole money no one seems to care. "Well, you hired them. They did the work. You owe them money." It's not a situation where, "Oh, their license is stolen" or "Oh, they're not even a registered of business," which in Florida you have to be to do air duct cleaning.

Mike B (05:19)
The scam is pretty consistent. In fact, I've found it across Europe, England, and other parts of the United States beyond Florida. I know you've been active in the Google forums. I've seen you there. Have you attempted to report these instances to Google?

Zachary (05:37)
Yes we have, we've had tickets. Last I checked, they were still open. But they've been open for months. Every once in a while we get a reply that somebody's looking at it, but then you don't ever hear back.

Mike B (05:50)
If Google doesn't fix this, you're sort of in a very awkward competitive position because these guys are low-balling the price. Obviously somebody can't even come out to a house these days, drive a van, send two technicians and do any work for $99. So clearly the loss-leader pricing and then the scam puts you guys at a competitive disadvantage.

Zachary (06:17)
First off, for $99 you can't afford to spend the gas to even go over there and pay your technician, to pay for your vans, your equipment, your insurance.

It wouldn't even be worth an hour of work to do it for $99. But then that's not even taking into account that the cost can be easily $70 for that lead in local services. So there's no way to make money off of that. So it's just a way to get their foot in the door and then scare you into paying more.

Mike B (06:52)
Has the [LSA] cost always been $70 on duct cleaning?

Zachary (06:56)
No, when we first started – I would say it was a year ago – it's hard to say because they don't show you the old pricing. But I want to say that it was around $35, maybe closer to $40. It went up a lot. In the last few months, it's gone up considerably.

Mike B (07:13)
So obviously you have a high cost per lead, which drives the job cost up. That also means you can't accept these very low jobs. Have you seen other impacts on your business? Have you lost any customers because of the pricing structure?

Zachary (07:27)
Since Local Service Ads appear above regular Google results, even organic results or Maps, what'll happen is: if somebody looks up air duct cleaning even just as a curiosity, they have five or six numbers right at the top that they can call and ask for pricing. Even if we show at the very top and someone calls us and they like the profile – they read your reviews, they look good, your photos look good, your website looks good even if all that matters, and they looked us up and booked with us – there's a lot of other people they can shop with.

And if even we're seen, even if they look us up specifically, they look up our names specifically, before our organic results or before our website, a lot of times Local Services Ads still show. So then that might drive them to call somebody else. And then if they call someone else and they get quoted $99, which isn't realistic pricing, if they get quoted that, they cancel [us]. So we've had a lot of people that cancel just because they found pricing that's $89, $99. It just doesn't make sense to book for more than that, in their eyes.

Mike B (08:36)
Have you had customers calling you after they've booked the $99 deal?

Zachary (08:42)
We get that a lot. Yeah. We get that a lot where, where someone says, "I paid $99 dollars for these guys and then my AC company came to service something or check something or change the filter and they said it's filthy and needs to be cleaned." Or we've had situations where somebody did the $99 and then less than a week later, they're noticing dust all over their furniture or more dust coming out of the vent.

So a lot of times all [the scammers] do is just, hook a machine up, maybe a Shop-Vac, stir some dust up in one of the two of the vents and then leave and say it's done. Then it just either makes things worse or, whenever somebody actually goes to check the work, if they do, then they see that, nothing was actually done.

Mike B (09:30)
So how do you compete in this world, in a world where Google, the police don't seem to care? The authorities can't nail this, it's nailing jello to a tree, and Google is not taking action. How do you perceive the competitive environment and its short and medium and long-term impact on your business?

Zachary (09:52)
The only thing we can do is we can tell people. Even when people cancel, a lot of times we tell them, do your homework, make sure that they're actually licensed, actually insured. Ask them about the process and make sure because there's a lot of scams. We have to let people know that all the time. We've even had people that booked with us that weren't going to cancel, but they said "I know a neighbor that got it done for this price." And it's, we have to explain to them.

A lot of times we're going back over people's work to fix it. A lot of times we'll have to book a free estimate and come out and see. What did they do? Did they mess anything up? Did they even do a job? What needs to be fixed? A lot of people come to their senses afterwards, unfortunately, where they realized like "$99, I don't think I would have done it. So I don't know why they would."

Mike B (10:43)
Obviously the LSA ads are compelling, particularly these people that are stealing licenses because they often steal reviews and they have thousands of reviews, often from public parks and attractions. Have you heard of many of these users going back to Google and taking advantage of the Guarantee?

Zachary (11:03)
No. I know you can. It's just it's one of those things, even with the tickets that we've submitted. I mean you're waiting weeks, you don't know, are you going to hear back from them? It's easier to just kind of do it yourself if you can to backcharge a credit card or cancel a check or whatever you can do. But the problem is that in Google's eyes they're legitimate. You know they put their seal of approval on them so if they came out and did the work ... Then the work's done in according to them.

I didn't trust that they would actually refund it. And if they would, it would require so much effort on your part to prove, what they did or didn't do and who's going to sit there and you record everything and write everything down. A lot of these guys don't want to give receipts. They don't want to show up in a marked van. There's nothing to really prove to Google that, this was them that showed up that you're talking about. This was their work. How do you prove that without documenting the entire thing A to Z, which no one's expecting to have to do that.

Mike B (12:08)
Any other thoughts for other businesses that are competing in this nationally? Texas, Maryland, where we're seeing it a lot.

Zachary (12:16)
Really the only thing I can think of is keep pressuring Google. Keep submitting everything. The problem is, it's so easy. With the parks, it's so easy to see it. You, you open the park next to the [scam business], you show them. It's one for one. You see the same reviews, the same names, the same photos; you see pictures of dogs and trees. What does it have to do with air duct cleaning? If one person spent two minutes to look at that, they would know that those aren't real reviews.

But the problem is I don't think anybody actually reviews them.

Mike B (12:49)
One of the things I found today, which I thought was interesting is I found one of these duct cleaning scams stealing reviews from Stanley Steamer. Stanley Steamer had 2,700 reviews that were stolen.

This is a duct cleaning company in Baltimore and DC area, stealing reviews from a company in Peoria. Because it wasn't a public attraction, there were no photos and the reviews sort of made sense: "They came to the house, they did a good job, they cleaned up after themselves." So the reviews weren't totally weird; they were very difficult to spot.

What I'm seeing is that these guys are getting more sophisticated in terms of whose reviews they steal, not just these attractions.

Zachary (13:36)
Yeah. That one I would think would be easier just because of Stanley Steamer has, Google, which I would hope they do. It should be easy to say "this is my content, take it down," but it's, it's harder.

Mike B (13:49)
But Stanley Steamer doesn't know that it's happening. Hopefully one of these days soon Google will take action.

Certainly seems this has been an ongoing problem and it seems not only are businesses at risk, but consumers are too. Thanks again, Zach. I really appreciate you taking the time.

Zachary (13:54)
Thank you for having me.