March 12, 2012

 

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NJ considering automatic renewal law

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Ken,

There is a bill now going into committee in NJ that would effect automatic renewal of service contracts. A-1585. This is the same bill that was also interdicted in back in 2007 and died in committee.(then A-3770)

Back in 2007 some people gave testimony and made some statements that could not be supported at that time. One statement was. " that even if a customer does not pay his contracted monitoring fee, the courts have ruled that, due to safety reasons, monitoring must not be turned off."

In light of this statement I would like to ask you if you can give me any cases you know of that supports this statement. I was asked at the 11th hour to go to Trenton on Monday and testify before the committee on this bill. I would like to be prepared to support any statements that might be made at this hearing.

Your insight would be greatly appreciated. Thanking you in advance on any help you can offer.

Gerard Duffy

Spectrum Cable & Alarm Systems Inc.

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Answer:

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Unless there is a statute that requires continued monitoring the monitoring can stop with the contract termination. Some jurisdictions require that the AHJ be notified before fire monitoring is terminated, I've heard of a requirement for burglary alarm notification also. But in the overwhelming jurisdictions I do not believe there is any law or policy regarding continued monitoring. And, by the way, there is no requirement for continued monitoring, only that the AHJ be notified before termination.

Alarm service is not utility service and not regulated by tariffs, but by contract.

Automatic renewal laws need to exempt a month to month renewal so that monitoring and service does not stop abruptly and without notice, which would be the case with an ill advised law that either prohibits auto renewal or requires some procedure for the auto term to be effective, without exempting the month to month renewal.

Legislatures should be careful what they wish for [and enact into law] because they need to consider all of the consequences. It's one thing to want to protect consumers [and you know that "consumers" are the "least sophisticated consumer" - which I guess means they are pretty dumb] but it's another to look at the flip side of the so called protection law. As it applies to alarm services, without some contractual commitment for continued services, alarm services, such as service, but perhaps more importantly, monitoring for fire, temperature, personal emergency response, emergency panic as well as the run of the mill intrusion, abruptly comes to an end. Even if a law imposes some obligation that an alarm company send some notice that the contract is about to end and that no automatic renewal is permitted, how comfortable can the legislators be that the "least sophisticated consumer" will understand that monitoring is going to stop unless the consumer does something which would include an affirmative act to extend the existing contract or enter into a new contract.

It's not practical.

Legislators should understand that the alarm industry does not include automatic renewal provisions in contracts to fool consumers or take unfair advantage of them. The purpose of the automatic renewal clause is to provide continued coverage for what the alarm industry believes is important if not essential protection for person and property.

In an apparent knee jerk reaction to someone pissing off the wrong person, in 2003 Arkansas enacted a law that prohibited ONLY THE ALARM INDUSTRY from having an automatic renewal clause in the contract. The law had to be changed in 2007 to permit month to month renewals. https://www.kirschenbaumesq.com/autoarkansas1.htm

Month to month renewal makes sense for the public and for the alarm industry. A fixed term contract will provide the consumer with peace of mind continued protection and at the same time afford the alarm company a reasonable return on its investment in providing the services. Like many other service industries, alarm contracts with continued service [such as lease, monitoring or service] contained automatic renewal provisions with a renewal term that was the same as the initial original term. Thus a 5 year contract renewed for 5 years. This practice invited scrutiny and gave [good] cause for corrective [and coercive] legislation. The renewal term could not be justified in the same way as the original term.

I have expressed the opinion that long term renewal does not serve the interests of the alarm industry either. Before the contract is set to expire I suggest that you endeavor to get a new contract signed. With technology changing almost weekly in this industry it makes sense that your subscribers will want or need additional or different protection and services. Ignoring contracts because they have an automatic renewal clause is a good way to ignore your customers, and a good way to lose out on significant RMR for additional services.

When considering what type of renewal clause to include in your contract you should also be mindful that although presently there are only small number of states that have legislation addresses automatic renewal clauses, it is likely that most states will get around to addressing the issue, and when they do the legislation is likely to permit renewal only after providing some notice to the customer [ which notice may actually more cumbersome than getting a new contract signed], may limit the length of time and may have other provisions that make compliance difficult. But, legislation is likely to exempt a month to month renewal provided the subscriber can cancel a renewal, effectively giving a 30 day cancellation right.

For this reason the Standard Form Contracts all have month to month renewal [except PA by the way, which permits renewal only if the contract has certain provisions and then doesn't limit the time https://www.kirschenbaumesq.com/autopennsylvania1.htm ].

 

You should also consider that when thinking about What's My Alarm Company Worth ? we do take into consideration if your contracts are in original term, if you rely on automatic renewal clauses and if you comply with automatic renewal laws in your state.

 

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Follow up on ADT challenge to municipal fire alarm monitoring

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We have five fire alarms in Hinsdale, IL, which also mandates that commercial fire alarms be connected to them. Their fire protection district monitors the alarms. The company that maintains the radio (AES) transmission and receiving equipment at the fire dept., is ADT. They monitor for alarms and general troubles only, not supervise any system tests or monitor by zones.

Last year, one system was completely down, and the fire department knew nothing about it, as the radio was still working. The owner told us that the phone line to us was out, and for us to not worry about it as the fire department was still monitoring. So, we did not know the system was down, the fire department did not know, and the owner never checked it. Upon checking, we put on cellular.

We monitor the alarms for daily tests, troubles and zones. We are to advise only the owner's reps, and not the fire department. We also perform the annual certification.

It would seem that if the municipality required monitoring to be done by them, they should also be required to set up the same procedures as required of UL / FM approved Central Stations.

Alan Mills

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Never underestimate the power of big group of stupid people - the government. They just don't get it that killing businesses kills economy, employment, and kills America. If they put thumb up their butt and did nothing, our country would get to the top where it once used to be. Everyone would have job and lot of people would pay lot of tax money. The government would get more money in by doing nothing. Anyone with just half of brain would jump on that kind of deal. Does this mean that government officials have less than half of brain?

Dusan

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Ken,

On the Illinois municipality doing their own fire monitoring issue, does anyone know who is helping them get set up? For instance, did a particular manufacturer come in and set them up with central station equipment and software and did UL (Headquartered in Northbrook, Illinois), FM or ETL come in a help them get third party certification(s)? Does the fire district even meet these requirements or are insurers giving them a pass because they are a fire district? Are they having to pay for any of these services or are they gratis? All of this would be interesting to know especially if they are getting a free ride. I have seen similar issues on the police side in the past and there are those out there willing to help these department(s) get set up, for a reward of course, such as in this case where customers can use only one approved company. Looking at most cities, they are a financial mess leading me to believe that they are not the best business people. If they are looking at adding revenue, they better look at the added liability and the full cost of providing this service properly. After all, it is life safety. The added people required to provide monitoring, as well as the required service attention on three shifts, 365 days a year doesn't come cheap. When they become a business providing services over and above the norm, for compensation, I believe any exemptions they have as government may be out the window.

Bob Worthy CPP, President

Secur Technologies, Inc.

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