In recent years, some spectacular cases of damage occurred with vertical ground source heat pump (GSHP) systems in Germany. Broad media coverage attracted enormous public attention, with reports about land subsidence and ground uplifts causing severe damage to buildings. Consequently, sales of vertical GSHP systems have declined. The current study develops conceptual models illustrating the causes and effects of damage in relation to geological and hydrogeological settings. Our investigations revealed nine cases of serious damage in Germany, causing financial losses of more than 100 million Euros. In most cases, connection of aquifers by leaky annular space grouting was the main cause of damage. Guidelines to regulate the installation of vertical GSHP systems have been introduced successfully in all federal states. However, further risk minimisation strategies must be developed to restore the public’s confidence in GSHP technology. Quality assurance and quality control measures should include in particular the optimisation of backfilling materials and increasing use of monitoring systems.