7 Warning Signs of a Solar Panel Scam (And What to Do)

The solar industry has experienced rapid growth over the past decade, and unfortunately, that growth has attracted some bad actors alongside legitimate companies. Whether you're considering a solar purchase or already signed a contract that feels wrong, recognizing the warning signs of deceptive practices is the first step toward protecting yourself.

Before we dive in: we want to be clear that not every negative solar experience constitutes a "scam." Sometimes there are legitimate misunderstandings, or a product simply doesn't perform as hoped. However, the patterns described below — particularly when multiple signs appear together — may indicate intentionally deceptive practices that could give you legal grounds for contract rescission.

1 Extreme High-Pressure Sales Tactics

One of the most frequently reported red flags involves aggressive, high-pressure sales tactics designed to get you to sign before you have time to think. Based on our research, this is especially common in door-to-door solar sales.

Warning signs typically include:

• "This offer is only good today." Legitimate solar deals don't expire in hours. If a salesperson insists the price will increase tomorrow or the incentives will disappear, this is generally a pressure tactic — not reality.
• "I just need a quick signature to hold this price." Any request to sign documents quickly, without time for review, should be treated as a major red flag.
• Refusing to leave a written proposal. If the salesperson won't leave you with written materials to review on your own time, they may not want you to look too closely at the terms.
• Multi-hour presentations designed to wear you down. Some sales tactics involve extended in-home presentations that continue until the homeowner signs out of exhaustion.
• Emotional manipulation. Using environmental guilt, fear of rising utility rates, or claims about neighbors who "already signed up" to create urgency.

2 Unrealistic Savings Promises

Exaggerated savings claims are one of the most common complaints in solar consumer complaints. While solar panels can reduce electricity costs, the specific savings depend on many variables, and some companies make promises that are difficult or impossible to achieve.

Red flags to watch for:

• "Your electric bill will be $0." While net metering can significantly reduce bills, most homeowners will still have some utility charges (minimum connection fees, demand charges, non-bypassable charges). A promise of zero bills is typically misleading.
• Guaranteed specific dollar amounts. Savings depend on energy prices, your usage patterns, weather, system performance, and rate structures — all of which can change. Exact dollar guarantees are suspect.
• Using inflated utility rate increase projections. Some proposals assume 5-8% annual utility rate increases to make solar look more attractive. Historically, average increases have been closer to 2-3% in many markets.
• Ignoring the total cost of the contract. A salesperson who focuses exclusively on the monthly payment — and avoids discussing the total 20-25 year cost — may be hiding unfavorable economics.
• Claiming solar will increase home value by specific amounts. While solar may positively impact home value, the claims should be supported by local comparable data, not national averages.

3 Misrepresenting Ownership vs. Lease

This is one of the most serious deceptive practices we've identified in our research. Some solar salespeople describe a lease or power purchase agreement (PPA) as "owning" your panels, or use language that deliberately blurs the distinction.

What this looks like:

• "You'll own the panels." When the contract actually states it's a lease or PPA, and the solar company retains ownership of the equipment.
• "It's like buying — you're just paying over time." Leases and PPAs are fundamentally different from purchases. With a lease, you don't own the equipment and can't sell it, and the company may place a UCC lien on the equipment. Learn about UCC liens →
• Using the word "agreement" instead of "lease." Some companies use euphemistic language to avoid the negative associations of the word "lease."
• Not disclosing the contract type clearly. The type of agreement (purchase, loan, lease, PPA) should be clearly stated on the first page of the contract.

4 Hidden Escalator Clauses

An escalator clause automatically increases your monthly payment by a fixed percentage each year — typically 1-3% annually. While escalator clauses are not inherently deceptive (and are disclosed in the contract), the problem arises when they're not clearly explained during the sales process.

Why this matters:

• A 2.9% annual escalator on a $150/month payment means you'd be paying approximately $220/month by year 15 and over $290/month by year 25.
• Your utility rate may not increase at the same rate. If the escalator outpaces utility rate increases, your solar payments may eventually exceed what you'd pay the utility company — defeating the entire purpose.
• Some salespeople emphasize the starting payment only. Showing you how affordable the first-year payment is while minimizing or not mentioning the escalator.

5 Unauthorized Credit Checks or Loan Applications

Some homeowners have reported that solar salespeople ran credit checks or even submitted loan applications without their explicit knowledge or consent. This is a serious issue that may violate federal and state consumer protection laws.

Warning signs include:

• Unexpected hard inquiries on your credit report after a solar consultation, even though you didn't agree to a credit check
• Receiving loan documents you didn't apply for in the mail or email
• "Let me just check if you qualify" — followed by a hard credit pull without clear disclosure
• Being told to sign a "preliminary" or "qualification" form that turns out to be a credit authorization or loan application

Under the Fair Credit Reporting Act (FCRA), pulling your credit without a permissible purpose and your consent may violate federal law. If this happens to you, document it immediately and consider filing complaints with the CFPB and your state attorney general.

6 Fake Government Incentive Claims

Deceptive claims about government incentives are a common tactic used to create a false sense of urgency or inflate the perceived value of going solar.

Common misleading claims:

• "The government is paying for your solar panels." The federal Investment Tax Credit (ITC) is a tax credit, not a government payment. It reduces your tax liability — you don't receive a check. And it only applies to purchased systems, not leases or PPAs.
• "This government program is ending soon." While incentive levels do change over time, salespeople sometimes create false urgency by claiming imminent deadlines that don't exist.
• "You've been selected for a special government program." There is no federal program that "selects" individual homeowners for solar. This is a sales tactic.
• Misrepresenting the tax credit amount. The ITC amount and eligibility requirements have changed over the years. Verify current rates directly with the IRS or Energy.gov, not from a sales pitch.
• Claiming tax credits for lease customers. If you're leasing, the solar company (not you) typically claims the tax credit. If a salesperson tells you that you'll receive the tax credit on a lease, this may be a misrepresentation.

7 Rushing Past the Cooling-Off Period

This is a particularly insidious tactic. Some companies or salespeople attempt to minimize, misrepresent, or actively interfere with your legal right to cancel during the cooling-off period.

Tactics to watch for:

• Not providing the Notice of Cancellation form. Under the FTC's Cooling-Off Rule, the seller is generally required to provide you with a cancellation form and inform you of your cancellation rights at the time of sale. Failure to provide this may extend your cancellation window.
• "You already waived your right to cancel." In most jurisdictions, you cannot waive your cooling-off period rights. If a salesperson tells you this, it's likely false.
• Scheduling immediate installation. By rushing to install the system during the cooling-off period, the company may create a situation where cancellation becomes more complicated (though you still generally have the right to cancel).
• Making the cancellation process difficult. Requiring you to call a specific number that's always busy, visit an office in person, or submit paperwork in a format designed to be cumbersome.
• Not answering cancellation requests during the window. Ignoring your calls and emails during the 3-day period, then claiming it expired.

Already Signed? What to Do Next

If you've already signed a solar contract and are recognizing these warning signs, here's a step-by-step approach:

If You're Still in the Cooling-Off Period

1. Cancel immediately. Send written notice via certified mail and email to the company's cancellation address (found in your contract).
2. Keep copies of everything. Your cancellation letter, the certified mail receipt, and any email confirmations.
3. Do not let the company talk you out of it. They may offer discounts or modified terms. You can always revisit the deal later if you choose — but protect your cancellation rights now.

If the Cooling-Off Period Has Passed

1. Review your contract in detail. Look for the specific issues described in this article. Note any discrepancies between what you were told and what's in the contract.
2. Document the misrepresentations. Write down everything the salesperson told you while you still remember. Note dates, names, and specific promises.
3. Gather evidence. Marketing materials, emails, text messages, the contract itself, your energy bills before and after installation.
4. File regulatory complaints. Even if you're not sure if your situation qualifies as a "scam," filing complaints creates a record and may prompt a response. (See the reporting section below.)
5. Consult a qualified attorney. If there were material misrepresentations, you may have grounds for contract rescission regardless of the cooling-off period. Find a solar panel lawyer →

Read more: What to do when your solar company won't let you cancel →

How to Protect Yourself Before Signing

If you're still in the research phase and haven't signed yet, here's how to protect yourself:

• Get at least 3 quotes. Compare pricing, equipment, and terms from multiple companies. Dramatic differences in pricing or savings projections are a warning sign.
• Verify the company's credentials. Check contractor licensing, BBB rating, Google reviews, and any NABCEP certifications. Search the company name plus "complaints" or "lawsuit."
• Read the entire contract before signing. Yes, all of it. Pay special attention to the sections on pricing, escalators, term length, cancellation, and dispute resolution.
• Never sign on the first visit. Take the contract home, read it, sleep on it, and discuss it with family members. If the salesperson pressures you to sign immediately, that's a red flag.
• Get all promises in writing. If the salesperson promises specific savings, performance levels, or terms, ask for those promises in writing. If they won't put it in writing, assume it's not real.
• Understand what you're signing. Make sure you know whether you're purchasing, financing, leasing, or entering a PPA. Each has very different implications.
• Know your cooling-off rights. Understand your state's cancellation window before you sign, so you can exercise that right if needed.

Where to Report Solar Scams

If you believe you've been a victim of deceptive solar sales practices, consider filing reports with the following agencies:

• State Attorney General — Consumer protection division (handles deceptive trade practices)
• Federal Trade Commission (FTC) — ReportFraud.ftc.gov
• Consumer Financial Protection Bureau (CFPB) — For financing-related complaints
• Better Business Bureau (BBB) — File a formal complaint (companies often respond to BBB complaints)
• State Contractor Licensing Board — For issues with installation quality or unlicensed contractors
• State Public Utility Commission — For lease/PPA-related complaints in regulated states

Filing with multiple agencies is generally recommended, as each has different jurisdiction and enforcement capabilities.

Frequently Asked Questions