3 Home Energy Scams to Avoid

April 23, 2013

Fraud and ScamWith summer coming up, consumers once again want to figure out how to save more money on their home energy costs. Indeed, saving money on home energy becomes more important during winter and summer, when more extreme temperatures demand more from air conditioners and furnaces.

Looking for ways to cut your costs is smart, but you need to be careful. There are plenty of products and services out there that claim to help you save money on your home energy costs. You need to make sure you know the difference between a legit offering and a scam.

1. Energy Audit Scam

One way for you to pinpoint the energy leaks in your home – and figure out how to plug them – is to get an energy audit. There are legitimate energy auditors out there. And, unfortunately, there are also a lot of scammers.

Some scammers offer you a free energy audit. At the end, they try to sell you specific (and expensive) products designed to improve energy efficiency. The worst offenders, though, are those that recommend certain services, like installing additional insulation, take a “down payment” from you, and then disappear without arranging for any of the work. You can install additional insulation yourself and avoid this scam.

You can usually get a home energy audit for around $50 to $100. It’s also possible, in some cases, to call your utility company and arrange for a free home energy audit. You can also perform your own home energy audit with one of the many free checklists available online.

2. Power Factor Optimization

The thought behind these types of devices is that you reduce the amount of reactive load, or electricity that is wasted as heat, from your home. At first blush, this seems like a good idea. The pricey gizmo has to be specially installed, and it is something that has been adapted from industrial use to home use.

Unfortunately, even if the device you’re being sold works as advertised (to balance current and voltage), it won’t do you much good. Why? Because most utility companies only measure the resistance load – the load in the electric circuit that does all the actual work – for residences. For the most part, your reactive load isn’t even being measured. Any savings from this device would be extremely tiny.

Huge industrial installations can get some benefit from these types of devices because the reactive load due to equipment use can be significant enough to matter. In your home, though, it’s unlikely that the utility is even charging you for the reactive load. Buying a power factor optimization device is usually pointless.

3. Make Your Own Alternative Energy

There are some legitimate instructions on how you can create your own alternative energy devices. There are backyard windmill kits and build-your-own solar panel kits. However, in order to do it right, you might need an electrician to help you out – or at least double-check your work. Buying the tools and equipment might also be quite expensive.

On top of these difficulties, you need to be aware that there are plenty of scams out there, too. There are dozens of scammers selling fake plans that don’t actually work, or getting you to shell out for videos and programs that don’t actually tell you how to do anything. Be wary of these do-it-yourself kits. Some of them work, while others are just scams.

Before you buy a kit or pay for a DVD, search online for reviews, and check for Better Business Bureau information on the company providing the instructions or kit. Protect yourself against these types of scams by being skeptical of what homemade energy solutions are actually feasible.

What other home energy scams have you come in contact with? Leave a comment!


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Miranda writes about personal finance almost every day. An experienced freelance writer, she's covered your money online and in print from every angle and is always looking for new ones.

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