September 15, 2011
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Question
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Ken
We have a number of companies in our area that install the day they get the contract signed. This is illegal but they do it anyway. My question is what can happen if you do so. Can the alarm customer have the alarm company pull the alarm system out anytime after or is there a limit as to when the customer by default accepts the installation and the 3-day goes away?
Bob Hanley
Certified Security
Spokane, WA
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Answer
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It's not illegal if you don't use the 3 day notice of cancellation. Illegal means criminal, and I don't think any state statute or the federal statute makes it a crime if you fail to provide the notice. There are however other consequences.
The notice that goes in the consumer contract advising the subscriber that there is a 3 day cooling off period is the same in just about every jurisdiction. But the actual cancellation form is different in many jurisdictions, which is one reason residential contracts have to be customized state by state. You can check out your state here: https://www.kirschenbaumesq.com/noticeofcancel.htm
The statutory penalty is all jurisdictions is fairly uniform; until the notice is given the consumer has the right to rescind the contract and be restored to status quo pre contract installation. That means, you will be required to remove your equipment, restore the premises and return all money. Pretty harsh situation if the installation is completed, but it's easy enough to comply with the law so you have only yourself to blame.
There are other consequences for failure to comply. For example, some states take the position that routine failure to comply with the statutory cooling off requirements constitutes deceptive business practices. Enforcement agencies, such as the attorney general, consumer affairs office or even the criminal prosecutors, may commence action against a company that routinely engages in deceptive business practices. You could be required to offer all your subscribers a right to cancel and get a refund. That can be quite a mess if you've been in business long enough to accumulate lots of subscribers.
Another problem that arises is that when you go to sell your subscriber contracts and accounts a prudent buyer may refuse to buy subscriber contracts where there was no compliance with the 3 day notice of cancellation. Keep in mind that non compliance can be because the contract itself is defective or the cancellation form was not provided. If you do comply with the notice provision but install within the 3 day cooling off period then you probably risk only a later cancellation within the 3 day period. I would not recommend that practice however because it could be deemed deceptive business practice if it's a routine persistent practice you follow.
The 3 day cooling off requirement has been address a number of times and you can read additional articles at:
https://www.kirschenbaumesq.com/earticle385.htm
https://www.kirschenbaumesq.com/earticle136.htm
https://www.kirschenbaumesq.com/earticle252.htm
https://www.kirschenbaumesq.com/earticle471.htm