Actually, they better hope nobody get really aggravated and finds a lawyer hungry for a class action law suit... They are playing with fire.
FWIW
The class action suit bomb has been dropped before, about other X10 products that "had problems" (i.e the CM15A and AHP software).
The flood cam has been around for years incurring the same complaints. One of the problems is the CMOS pick up. CMOS does not have high resolution nor good light sensitivity, but the device is much less expensive compared to a CCD pick-up.
"PJ Guy" expresses well the secret by which X10 survives. Make products as inexpensively (cheap) as possible and exchange product or refund unhappy customers. A "class action suit" would fly ONLY if X10 thumbed their nose at the dissatisfied customers, and they really do not.
As PJ Guy said; there is better, higher quality, equipment available...but at a MUCH higher cost. You have to decide which way you want it. And as an engineer, you know extremely low cost is typically not synonymous with premium quality.
As far as "working as advertised", I have yet to find any meaningful "specs" for X10 products, so claiming they do not "work as advertised" can be subjective and hard to prove, unless the device is totally defective, in which case the exchange or refund clause activates.
"They are playing with fire". I really don't think so. X10 has been operating in the US since the very late 70s. They have HQ'ed in New Jersey, New York, Washington state and Nevada, and so far have not incurred the wrath of any of those state's attorney generals, so if they are playing with fire, they must have a good fire extinguisher on the sidelines.
IMHO, X10 makes pretty good products at pretty cheap prices. I know of no place else where you can get whole house security systems, multi camera CCTV systems with pan and tilt, and fully automate lights and appliances in an average sized home for less than four figures. I guess those of us that have realized that fact are much more tolerant of X10's sometimes marginal quality.
Puck Edit: fixed the quote start/stops