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3 day notice and how long to keep files
April 11, 2018

At the ISC show?  Stop by to say hello
April 11:   Affiliated Monitoring suite (Bellini 2006) 1 -2 PM 
                 Rapid Response Monitoring booth  2 -4 PM
April 12:  Stages luncheon 11 AM.  For central stations only
                COPS Monitoring booth:  1 - 2 PM
                All American Monitoring booth:  2 - 3 PM

3 day notice and how long to keep files
1)      Do existing customers, who are renewing their contracts which are outdated, also need to sign a right of rescission?
2)      How long do we keep closed files on dead-end customers?
    Best regards,
Dale Schoenfeld, Office Manager 

    The 3 day notice of cancellation is one of the more troubling legal issues alarm companies have to deal with.  Failure to comply with the notice requirement can cause the contract to be voidable at the option of the customer at any time until there is compliance.  But the customer's continuing right to cancel and role back the transaction [including requiring you to remove equipment you may have installed] is only one concern, and this concern is generally limited to that one customer.  But there are other concerns and they are much more serious and potentially detrimental to you financially.
    When you go to sell your subscriber accounts a buyer may refuse to buy any accounts where you can't show that you haven't complied with the 3 day notice of cancellation.  That could affect all your residential accounts.  It's probably overly cautious for the buyer to take that position, but hey, it's the buyer's money [or more likely the bank's money, and no point trying to talk to them].  
    The other significant concern is a Consumer Agency, licensing agency or Attorney General taking the position that your persistent and consistent failure to comply with the 3 day notice requirement constitutes deceptive business practices.  You could end up losing your license or have it suspended, having to notify all your residential subscriber that they can cancel and get a full refund, face large fines, incur legal fees and spend sleepless nights.
    Think of the 3 day notice requirement as the "door to door" sales act and the 3 days as a cooling off period.  The statutes are in response to high pressure sales tactics used by home improvement sales people long before alarms became a home staple.  But the alarm industry has fully embraced the sales techniques, and is certainly subject to the 3 day notice law.  
    If you have visited the home during any part of your sales pitch it would probably be a good idea to offer the 3 day notice.  Arguably if you have on-line sign-up, mail, fax or email the contract to the homeowner, who then signs on-line or returns it to you by mail, fax or email, you don't have to offer the 3 days cooling off period.  But you better be able to show a potential buyer of your contracts that you didn't have to comply with the cancellation notice.  The buyer won't have the burden of showing you did have to comply - you will have the burden to show you didn't, and a bank may not even want to listen to any explanation.  So, you may be better off offering the 3 day notice even in those situations where you don't really have to.
    Business records should be maintained for as long as you might need them.  I know that begs the question.  You can be sued for tort within 3 years and contract within 6 years [your state may have different times, though none likely more than 6 years].  The Standard Form Agreement cuts the time for you to be sued to one year.  But guess what?  You need to have that contract when it comes time to defend yourself, so if you throw it out after one year and you get sued in year 3, you're going to have an uphill burden proving that your contract with that complaining customer had the one year provision.
    Your contracts should, as a general rule, be maintained for 6 years after the contract has terminated or the relationship with the customer has ended, whichever is later.  [so if you sign a new contract you should continue to keep the old one].  


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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
516 747 6700