October 18, 2011

 

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Question

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Ken:

I have a client who was turned off for non payment after about 5 months of service. Her first auto draft was returned with NSF. We sent her invoices but never received a payment from her. About 4 months later she called up to have her account reactivated. She paid the arrearages and we asked for a new auto draft. She gave us the auto draft form which was noted to start charging quarterly Dec. 1, 2011. (She asked to be turned on Sept 1--the day before the holiday). I saw the note and asked her to be called to say that we would not reactivate the service until the current quarter was paid. In addition to the written authorization for the auto draft, She gave a different credit card over the phone (with the security code) and expected to be activated that day. She said there were 3 break ins across the street, so I put 2 and 2 together and figured she knew she was in arrears and now needed her services. After a few conversations with my collections person, I spoke to her and she was irate that her system had not been turned on that day. She told me that her husband had a liver transplant and that is why the bill was not paid. I said I was sorry to hear that and that I would waive the reactivation fee. I tried to explain to her that we turned her off in May 2011 and a few weeks later she called in to make payment arrangements, which were not honored. I explained up until our conversation, I had a dead beat customer, but I understood her situation, but that is not a good reason for her to make demands since she hadn't paid the invoices in about a year.

Here is the issues:

1) your contract was signed by her. If an account was suspended for non payment in May and paid up in Sept, does the sub have a right to have her term adjusted for the time she paid for but did not receive services or to not charge her for the period of suspension and

2) I can see this lady is going to be a pistol, threatening to call the Attorney General and the credit card company. In the past, the credit card company washed their hands of the complaint because of the contract. Since the contract is for monitoring services which we are ready, willing and able to provide for the term and the client has sent in a letter to immediately stop the services, her grounds being she does not feel comfortable dealing with our company.

One other major note: She had been with ADT, Brinks and then us. Per our the false alarm jurisdictions instructions, we had faxed a letter to switch the company on record. She had been sent a renewal by FARU for her renewal registration in Feb 2011, but failed to respond. She told me that she never received it. The FARU told her she had not been registered, (they told us they did not get it, however, we have the fax report to prove they got it) AND she called my central station who told her that she was not registered. Of course she was not, we suspended her services back in May 2011. She actually was registered under the previous company name but had been suspended due to non renewal.

So, a few issues. She is disavowing the issue of the re registration saying it is not her problem. We have the proof showing she was. True, she was no registration number on file with our central station, but the FARU does not receive that info, so she was registered. She is claiming that because she was not registered she had no protection during that time. Well, no signals were received by the central station during that time, nor was she dispatched on so we do not know if they would have dispatched or not.

More than likely I got this lady because she had defaulted on her previous companies. I also know that your contract is binding. You will probably tell me to cut her loose, which I am willing to do. However, my business principles say to send her an invoice for the balance and turn her over to collections.

Your thoughts? Primarily about the suspended time and collecting for the past due balance which included that suspended time.

Sorry for the details, but we do not need clients like this and those low ball monitoring companies can have them all day long. She is a bad client, but we all have them!

R.

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Answer

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First things first. The Standard Monitoring Contract does have a contract term, 5 years, does require the Subscriber to pay for the entire term, does provide for a liquidated damage recovery of 80% of the balance of the contract term when there is a breach, and does permit suspension of monitoring services and termination of monitoring services if the Subscriber defaults in payment, without relieving the Subscriber of paying for the full term less the 20%. So, you certainly can terminate this subscriber and proceed with collection efforts.

Your inquiry reveals a few other issues that I think need to be considered before you make your decision which way to proceed. Clearly one reason you had your subscriber sign a contract was to protect your bargain of the contract - you expect to get paid per the contract terms, and in return you expect to perform your end of the bargain. Civilized people have these expectations and most live up to their obligations when possible.

On the other hand there are subscribers who are unable or unwilling to perform their end of the bargain. Some may suffer unforeseen and unfortunate personal issues that prevent performance, and others may simple just don't play by the rules, scammers or nuts, or both.

If you are a company that has in house collection department then your collection matters are routine and you probably have plenty of activity, especially in this economy. From your inquiry I get the impression that you don't have a collection department and that you do not regularly have or pursue delinquent subscribers; otherwise this account probably would not even come to your attention before collection efforts commenced.

Here you need to balance your desire to be paid with the likely aggravation this account is sure to cause, whether performing or not. This account is going to be a problem. While I would not normally be dissuaded from pursuing a subscriber who threatens to file complaints to licensing and consumer agencies, or seek counterclaims for manufactured damages, if you are dealing with a subscriber who you can guess is going to waste too much of your time and money it just isn't going to be worth pursuing the account. If you let it sit for 6 months before starting any action you will be inclined to let it go. I'd write this one off.