Orkin Bugged By Lawsuits

(CBS)  Elizabeth Allen has a name for her Florida home.

"The termite buffet," she says. "They've been in my front entry way. They've been in my dining room. They've come up in swarms."

But what really eats at Allen, CBS News Correspondent Mark Strassmann reports, is her termite company. She hired the "Orkin Man." For six years, she says, Orkin improperly treated her home, botched repairs and hid superhighways of termite damage. She now estimates that sixty percent of her house had had some kid of termite damage.

"I think you hire Orkin to protect your home and all of a sudden one day you realize you have to protect yourself from Orkin,'' said Allen.

Even Orkin's internal audit — in documents obtained by CBS News – showed a company wide failure rate of 45 percent for all initial termite treatments; and a 54 percent failure rate in the Southeast, the so-called "termite belt."

The company is now fighting four class action suits from the likes of Elizabeth Allen.

"They are engaged on an ongoing basis of defrauding homeowners who stand to lose the most important investment of their life," said Allen's attorney, Chris Searcy.

But if complaining customers often get nowhere, Wayne Cowart says he knows why. He's a plaintiff's termite consultant, and a former Orkin executive who oversaw all the company's damage claims. He says Orkin used its financial and legal might to discourage those complainers.

"It's like the bulldog fighting the skunk," Cowart says. "You may win, but it's just not worth it. And pest control companies know that. ... It's an epidemic within the industry. It's absolutely epidemic."

Orkin has another side to the story.

"The heart of our business is to protect people's homes," the company said in a statement, adding that termite claims make up less than one percent of its customers each year, and 98 percent of those claims are resolved to the customer's satisfaction.

But for their damage, Collier and Peggie Black were awarded $3 million from Orkin in arbitration.

"We don't feel like we beat Orkin. We survived Okin," said Collier Black.

Now Elizabeth Allen's bedroom may not survive. Wood taken from the walls crumbles from the tunnels made by termites.