Gaming the System: Part 1 – How Much is Too Much
by Mick Rhodes | email@example.com
Alison Roberts just wanted the nasty clog in her kitchen sink gone.
It was a Saturday in mid-May, and the 81-year-old Claremont resident had exhausted all home-remedy methods. She Googled “plumber near me,” and the top search result—with a five-star Google rating—was Rooter Hero Inland Empire, in Montclair.
She called, and a tech arrived shortly thereafter. He told Ms. Roberts, who lives on south Mills Avenue with her 83-year-old husband Glyn, their kitchen P-trap would have to be replaced, along with a section of vent pipe.
It was a job even Rooter Hero’s chief operating officer called “a minor repair,” so Ms. Roberts was stunned when presented with a bill for $2,082 after the tech had worked a total of six hours.
Numerous local plumbers from big and small firms, and a representative of the Plumbers Union Local 398 attested that price was inflated. But what drove the entire event—that Google search—turns out to be the real story.
After weeks of investigation and dozens of interviews with former customers, lawyers, consumer advocates, and the California State Contractor’s License Board, among others, what began as a look into Rooter Hero’s billing practices ended up uncovering widespread fraud involving fake online reviews and a complicit marketing firm.
The following is part I the COURIER’s four-part investigation on how one company set up a business designed to game the system.
How much is too much?
With their kitchen sink backing up, 17-year Claremont residents Alison, 81, and Glyn Roberts, 83, both retired, Googled “plumber near me.”
The top search result was the Montclair location of Rooter Hero, a company incorporated in Nevada, with 10 locations in California and Arizona (but none in the Silver State).
The Roberts’ are admittedly less than proficient on the internet. They don’t use Yelp.
Had they checked Yelp, they would have discovered hundreds of good reviews, as well as many irate customers using words like “con artists,” “a company of crooks,” “scam,” and “elder abuse” in their scathing reviews of Rooter Hero.
But they didn’t, and were relieved when the Rooter Hero tech, Giovanni Saavedra, showed up that afternoon at their south Mills Avenue home.
Mr. Saavedra quickly determined the kitchen sink P-trap and a section of cast iron vent pipe, which he said was corroded, would both have to be replaced.
The Roberts’ say they didn’t receive a written or verbal estimate from Mr. Saavedra prior to him starting the job. Rooter Hero says otherwise.
Mr. Saavedra worked under the sink for a while, replacing the black ABS P-trap. He then cut a small hole in the outside wall to access the vent pipe. He cut out a roughly 18-inch section of cast iron vent pipe and replaced it with a section of new ABS.
The Roberts’ say Mr. Saavedra was there two hours. The tech says four. Regardless, at the end of that Saturday he gave the elderly couple the bill: $2,082. They were shocked, but they still felt obligated to pay, and Mr. Saavedra swiped their debit card for a progress payment of $1,874.
The tech returned Monday and spent two hours patching the hole.
Figuring the price for the parts very generously at $100 including Rooter Hero’s markup, the company charged the Roberts’ $1,982 for six hours of labor, or $330-per-hour.
Is $330-per-hour a reasonable price to pay a plumber?
Rooter Hero Chief Operating Officer John Bergeron believes so.
“Yeah,” he said when asked about the hourly rate. “That sounds about right.”
Mr. Bergeron said all Rooter Hero jobs are billed at a fixed price, including labor and parts, set forth in a closely guarded company price book. The fixed price for this job was $2,082.
Or is it?
“Two thousand dollars doesn’t seem appropriate for that small of work,” said David Hanson, Business Representative for Plumbers and Steamfitters Local 398, the union that represents plumbers in the greater San Gabriel and Pomona Valleys. “Obviously I really feel that particular bill sounds pumped. I feel that they’ve added additional activities in there in order to inflate that cost. I would love to see that pricing book.”
Other experienced industry folks agreed.
“That is insane,” said Gary May, 67, owner of Montclair-based Ray May Plumbing, a 60-year community mainstay. “Because it doesn’t cost you that much to put a truck and a technician on the road. Most technicians make anywhere from $25 to $35 an hour. That’s outrageous.”
Other plumbers, from big and small outfits, concurred: the bill sounded unreasonably high.
The commission sales model
So why does Rooter Hero charge so much?
The COURIER’s interviews with Rooter Hero customers, online posts from former employees and consumer reviews, numerous Better Business Bureau complaints, and a revealing 37-page California State Contractors License Board document detailing scores of accusations of wrongdoing with respect to the company’s business practices, all make it clear: Rooter Hero techs offset their modest hourly wage with a generous sales commission, thus incentivizing them to upsell as much as possible.
“What happens is commission creates thieves,” said Larry Enright, owner of Rancho Cucamonga-based Option One Plumbing. “I don’t pay [my employees] minimum wage. A lot of them that do pay minimum wage plus commission, now what they’re doing is just getting that employee to just look for that commission. So they’re constantly trying to sell things or oversell things.”
It’s not just Rooter Hero’s competition—whom of course may have an ax to grind—that say the commission model breeds abuse.
Several former Rooter Hero employees posting employee reviews on Indeed.com call out the company for what they say are dishonest business practices. And while the majority of the employee reviews on Indeed are from gushing, happy techs boasting about their paychecks and the company’s generous commission structure, the dissenters are pointed in their criticism.
“This company focuses more on selling jobs and getting more money out of the customer, rather than the technical aspect of being a plumber,” read one from a former employee from Orange County. “I liked the fact that I could potentially make a lot of money, because I have a sales background as well. Unfortunately, with a company that focuses primarily on sales as opposed to product, there is always a risk that ethics and honesty may be ignored when there is money to be made. That is the case with this company. I did my best to sell jobs honestly and make my money the right way, but it seems like almost all of the employees around me were completely cheating the system in order to make more money; i.e., placing roots and other objects in pipes, creating leaks, [and] lying to customers about potential risks to prevent.”
Another read: “I worked at the Orange County, California location and quickly learned that the biggest liars and scammers get promoted and compensated very well for taking advantage of the elderly.”
You say incentive, I say commission
Why are there so many similar online reviews of Rooter Hero describing a kind of bait and switch strategy, a scenario echoed in a 37-page California State Contractors License Board document? https://tinyurl.com/CSLB-Rooter-Hero-Accusations.
According to Rooter Hero’s former employees, it’s simple: commission sales.
Mr. Bergeron refused to use the word “commission” when asked about the company’s compensation structure.
“It’s an incentive,” he said. “As I said, it’s complicated, okay? It is in keeping with all the other people in the home services industry. And that’s all I’m going to say about that. I’m not going to into the weeds about it. You want to come in and apply for a job as a technician? Then we’ll share the pay plans with you.”
The COURIER’s research revealed that commission sales for service technicians is common throughout the plumbing industry. Under this arrangement, the more a plumber sells, the more he or she makes.
Mr. Bergeron was asked if Rooter Hero’s “incentives” are the same thing.
“Why don’t you report on what your other companies are telling you?” he said. “I told you what ours is. And I’m not going to give you the actual construct of it, okay?”
Is Rooter Hero’s “incentive” program a trade secret?
“Yeah. What we pay our people is, you know, confidential, okay?” Mr. Bergeron said. “I’m not telling you what my pay plan is. And I’m not asking you what yours is. They have an incentive to keep the costs low, okay, and to do the job efficiently and with speed.”
The COURIER told Mr. Bergeron it was going to assume, since he would not answer the question about whether Rooter Hero’s “incentive” system equated to a commission, that the terms were interchangeable.
“You can assume whatever you want, Mick, okay? If you want a quote from me, don’t misquote me.”
The COURIER assured Mr. Bergeron he would not be misquoted, and told him it appeared that he was avoiding answering the question.
“That is your judgement,” he said.
Read part two of this series here.