comment on Copyright of Programming and Panel Lockout / canceling or misdirecting monitoring as collection tool / NJ collections - September 29, 2012

see below for The Alarm Exchange

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comment on Copyright of Programming and Panel Lockout
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Ken:
I've found the exchange on copyright of the programming of panels very interesting. [Sept 15, 2012 article] Once point that I believe has been missed is that the program has already has a copyright by the manufacturer. The installer is simply filling in variables and options that the author of the program has allowed him to enter or modify, the data entered by the dealer could not perform any function standing on its own. To bring the point home, your contracts contain a copyright, could dealers apply for a copyright on each contract simply because they filled in the blanks you left on the forms?
I also wanted to address a practice that some dealers use as a collection tool, which I believe could lead to serious liability. When a customer either cancels or does not pay a bill, some dealers reprogram the control panel to dial a nonfunctioning number. The concept is that the subscriber that may have been ducking phone calls and other collection attempts will have to call to get the issue resolved. The problem is that if there were an actual emergency and the communicator seized an held the phone line trying to communicate to nowhere, there resultant loss of property or life could fall back on the dealer. Since it was a willful and intentional act to disrupt communications specifically in the event of an emergency situation the liability level could rise to the level of gross negligence.
Mark S. Fischer
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Question re canceling monitoring for defaulting subscribers
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Hi Ken
I have 2 subscribers that recently cancelled on me here in New Jersey
Both from same town in NJ (upper middle class area)
I am using your standard contracts.
Both were somewhere in the middle of the contract - 5 years @ 29.99/mo,
both had existing systems when moved in and both have $2000.00 software
value:
a.. One cancelled on me because I told him $150 for system upgrade and complained he did not get it free with additional 12 window contacts ( I
cancelled him for non payment, right after this altercation, he was 6
months behind )
b.. 2nd cancelled just now because he was not baby sat by central
station after alarm occurred, proper notification and police dispatch,
meaning he did not get an update on what happened after police was
dispatched and came over to look over his house. (ultimately he was
explained that he may get a call if central will get any additional
info), but he is also enrolled in auto ACH but I just got this letter
this labor weekend.
And my question is
1.. should I cancel (2nd client) because I got a letter notifying to
stop all payments and cancel monitoring and send him a bill for 80% of
both monitoring and software value (which would be $1600 alone just for
software) or leave it until he cancels payments with his bank and then
cancel him for non payment? Also what do you think about $2000 software
value, is it a stretch?
Should I disconnect monitoring? He's paid up to September 30, and then
disconnect him after he does not pay final 80% and software value?
Thanks
anon
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Answer
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You didn't suggest it, but I agree with Mark Fischer that one thing you shouldn't do is misdirect the monitoring communication. I'd rather you remotedly posted a message on the key pad that monitoring has been terminated, no monitoring, or something of that nature. I'd like to recommend, but won't, that you post No Monitoring For Dead Beats. Probably too many characters anyway.
Also, be sure you don't disable the entire system. Just because monitoring is canceled that doesn't mean the subscriber shouldn't be able to arm the system.
The Standard Alarm Contracts provide you can terminate for non payment. No notice is required but I do recommend that you provide some notice. I do not think you should continue auto pay, whether by credit card or ACH once the subscriber has canceled or you canceled. Better to refer the case for collection. You're in New Jersey so you're in luck. My office covers NY and NJ for collections. Call Gene Rosen,Esq at 516 747 6700 ext 303 to get started. Collections are handled on a one third plus costs basis.
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Comment on defaulting program and codes
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From the Sept 28 2012 article: "Interesting question. I think the answer lies in the fact that the lock out code isn't going to be delivered in a vacuum. There is going to be some written request that the code be provided, defaulted or changed. There would normally be an exchange of correspondence [email or fax] or a signed work order or service ticket that the code was provided. Program changes thereafter would not be the responsibility of the alarm company."
Ken, the problem with this is there is no way to prove when programming changes were made. For instance, if the company taking over the account has to replace a bad sensor and inadvertently programs that intrusion sensor as a "local only" sensor, meaning it will not send any notification to the monitoring station when violated and there is an intrusion at that point with serious consequences, I don't see how the original company escapes liability. Yes, there would presumably be a record that the sensor was replaced by the second dealer, but they could claim they didn't change the programming, but left it as it was, without looking at it. Of course, they would be liable. But it seems the first dealer would be drawn in as well, with no really substantial defense. Most systems will record the fact (in the event buffer which is usually overwritten in a month or so) that a programming session was entered. But I've never seen one that records specifically what was changed.
For that reason, my practice has been (and I include the language in my contract as one of a few minor changes to yours) that upon termination I will default or remove the lockout code as well as all system programming at the customer's request. This leaves a line of demarcation, with me on one side and the new dealer on the other side. I'm responsible for what happened before, not him. He's responsible for what happens after, not me.
The customer has to ask me to do it. And I explain to them the system won't be usable until the next dealer reprograms everything. My recommendation is usually that they not make the request until they've selected another dealer and are ready to move forward. That way, if they wish, in the meantime, they can continue to use the system as a local only system. Of course, I get a signed repair order that the system was defaulted at the customer's request.
Lenny
5 Star
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Response
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Your approach or policy is fine as long as the subscriber goes along with it. If the subscriber owns the system and you are providing monitoring, you can't disable the entire system just because you won't be monitoring any longer.
Of course if it's a leased system then not only can you disable it, you can remove it.
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Ken,
In response to Lenny, 5 Star’s comments (9/28) on changing/defaulting alarm programming passcodes and software programs, I would offer the following opinion: When a business relationship with a customer is terminated, dealers generally prefer to default, rather than divulge, the programming passcodes because it is common practice for many dealers to use one common programming passcode for many (or all) of their accounts, and so revealing their passcode would be the equivalent of giving out the master key to all of their accounts. But in the case of a purchased (not leased) alarm system, the customer has purchased a complete, working system that cannot function without the proper operating software, and so the dealer does not have the right to default the system software to an out-of-the-box condition, as this would render the system inoperative and useless. The dealer has the right to remove his proprietary password by defaulting the password to the factory code, and has the right to disable the communicator from contacting his monitoring facility once the monitoring agreement is terminated, but his liability for the integrity of the operating software should end the moment access to the programming is no longer under his exclusive control, and this should be acknowledged in writing at the time the system is defaulted. Although the operating software may be considered to be the intellectual property of the installing dealer, I think there is an implied license to the purchaser of the alarm system to retain the basic operating program (short of communicator function) since the system is incomplete and cannot function without it. The dealer does not have the right to render equipment owned by a customer useless by removing or denying access to programming. He does have the right to release of liability for its function. Regarding whether the dealer can charge a fee for defaulting the passcodes and/or disabling the communicator, I see no reason why this wouldn’t be a chargeable service, especially if this is established in the original sales/service contract – or the cost for this eventuality could be built into the original sales price; in which case it would become a non-issue.
Andy
Fireworks, LLC
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To address question/comment from Lenny/5 Star on Sept 28 2012 article:

Q:
“My question is, would it be safer for the dealer to also default all panel programming at that time and receive a signed statement from the customer that this was done? That way if the new dealer makes errors in programming the panel resulting in a loss we may have some protection since we left the panel as it was when new, just out of the box.”
Comment:
Assuming the equipment is owned by the property/user, then it also must be assumed that in some way (whether ultimately profitable or not) that the property/user paid for the installation and/or setup (in one way or another – up front or through service agreement) at one point in time. Thus, to then subscribe to a concept that upon cancellation of a service contract the contractor would ‘clear memory’ of the programmed database would be unethical at best and open the leaving contractor to potential liability by being the last individual to access the equipment and as a result, leaving the property unprotected. Also, specific to fire alarm systems, the potential civil if not legal liability greatly increases due to the purpose of life safety vs. solely property protection. I would advise any and all fire alarm and security contractors to recognize that the loss of ‘good will’ when putting an end user into such a situation (whether a ‘buried’ contractual term or not) would statistically go beyond the one user... as I have shared the follow cliché in past forum filings:
Perform a good job and the customer will tell three others –
Perform a bad job (however interpreted) and the customer will tell ten people...
Is it really worth the cost?
Richard Schwank, Vice President, Operations - General Manager
Statcomm Inc.
Cheshire, CT
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