KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Automatic renewal laws coming to your state Contract sale ends in 3 days
January 9, 2024
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CONTRACT SALE OVER IN 3 DAYS -ORDER TODAY
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Automatic renewal laws coming to your state
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Ken
I want to alert you and everyone that the FTC has proposed laws affecting automatic renewal of contracts, both consumer and commercial. I know this is an important provision in the Kirschenbaum Contracts and all alarm contracts.
Bart A. Didden, President
U.S.A. Central Station Alarm Corp.
Port Chester, NY
Milford, CT
St. Paul, MN
Pasco, WA
877-872-1266
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Response
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Some states have laws dealing with automatic renewal and these laws are different enough to require that the Standard Form Agreements be customized for each state, especially for consumer / residential contracts. Up until now there aren’t a lot of states with automatic renewal laws.
All Kirschenbaum Contracts™ come with an automatic renewal provisions for month to month. Month to month is recommended because most states with automatic renewal laws exempt month to month. But as you will see from the FTC proposal there isn’t likely to be an exemption because one of the purposes of the proposal is to make endless subscription agreements more difficult to get signed or enforced. I’m not sure if I’m showing my age but some of you may remember the record, book and magazine subscriptions.
I’ve argued that alarm contracts need to have automatic renewal, especially for monitoring, because otherwise the monitoring service would stop abruptly, without notice, and that shouldn’t happen with life safety security. When negotiating that provision I make it clear that the alarm company should not be under the contractual duty to notify a customer that the contract is about to end. That may change if the FTC gets its way. Even if it doesn’t, more and more states are likely to enact their own laws dealing with automatic renewal, which is why I continue to recommend month to month.
Let me clear up what may be a misconception; as long as you have automatic renewal month to month is usually as good as a longer term automatic renewal when it comes time to selling your accounts. When all accounts are in such renewal the multiple will likely be less but not when most are in original term.
Well drafted alarm contracts include an automatic renewal provision. Many industries, particularly those who use the RMR model, rely on the automatic renewal provision.
I have questions whether the FTC has the authority to usurp Congress and impose such sweeping and fundamental laws. The current Biden regime will have no problem with the FTC’s action; whether that action will pass judicial muster if challenged remains to be seen. Here a synopsis of the FTC proposal:
The proposed federal rule would require clear and conspicuous disclosures of automatic renewal terms, affirmative consent, and easy cancellation procedures, among many other requirements. This proposed rule would apply to consumer and business-to-business contracts. The current proposal include new disclosures, consent, renewal reminders, cancellations, misrepresentations, and enforcement rules.
Disclosures
Initial disclosure will require certain information, including whether any payments will be recurring until canceled, the deadline to act before incurring additional charges, the amount, dates, and frequency of charges, and instructions on how to cancel. This information must be provided for online, print, telephone, and in-person offers, and it must be provided “clearly and conspicuously” and “immediately adjacent” to the request for consent.
Consent
The proposal would require affirmative consent to required disclosures. The consent to the renewal terms would need to be separate from any consent to the transaction or contract more generally; in other words, the request for consent would need to take the form of a check box, signature, or other substantially similar method, which the consumer must affirmatively select or sign to accept.
Renewal Reminders
Annual reminders would be required for anything other than physical goods. The reminders would need to identify the product or service, the frequency and amount of charges, and the means to cancel and be delivered in the same manner as consent was provided.
Cancellation
The proposal would require simple and easy cancellation methods, which the FTC calls click to cancel. The cancellation option must be as simple as the method used to sign up, and it also must be offered through the same medium used in the sale (e.g., a consumer who purchases a subscription online must be allowed to cancel online). The rule would also require consumer consent for a business to pitch any additional offers or modifications to a subscription at the time of cancellation.
Misrepresentations
The rule would prohibit any misrepresentation of a material fact related to any part of the transaction, product, or service, regardless of whether the misrepresentation is explicitly related to the negative option feature.
Enforcement
The rule would expand the FTC’s enforcement power, such as its ability to seek restitution, injunctive relief, and civil penalties for any alleged violations, including violations of the new rule concerning factual misrepresentations. Individuals in states with broad consumer protection statutes that permit claims for violations of other laws may be able to sue for alleged violations of the new rule in either individual or class action suits.
Preemption
Assuming the rule as drafted (or substantially similar) is adopted, the FTC has made clear that the rule would not preempt state automatic law, except in cases where compliance with both laws is impossible.
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THE CONTRACT SALE: NOW THROUGH JANUARY 12, 2024
Join the Concierge Program before you order contracts and get additional 10% discount. Join here: https://www.kirschenbaumesq.com/page/concierge
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NOTICE:
The Standard Form Agreements have been updated for 2024; over 10 changes, some significant. Check with our Contract Administrator, Eileen Wagda, at 516 747 6700 ext 312 to see if your forms need updating. Keep in mind that updates are free for 6 months and half price for 12 months from your original order date. Requests for updates will be processed after the new orders are processed. The sale ends January 12, 2024; the sooner you order the sooner you will get the contracts. Please do not call requesting priority unless you are a Concierge Client or have paid for expedited service.
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How to order: order at www.alarmcontracts.com - ordering is easy - order on-line during the sale and save thousands of dollars. Need help ordering? Call our Contract Administrator Eileen Wagda at 516 747 6700 x 312 for assistance. Concierge Clients can call our Concierge Program Coordinator Stacy Spector, Esq for assistance at 516 747 6700 x 304. Concierge Clients receive an additional 10% off the sale price. You can join the Concierge Program before ordering to receive the discount and you should take advantage of this program.
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Contract sale runs through January 12, 2024. This will definitely be the best deal of 2024. When you place the order the full price will come up. We will apply the discount manually when we process the order. Contracts will be delivered by email only. Just order what you need - we will check and apply the proper discounts.
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Here's the deal:
Buy 1 All in One Residential, Commercial or Fire All in One and get $100 off and $50 off Disclaimer Notice save $150
Buy 2 All in One forms and get $100 off first and $200 off second and $75 off Disclaimer Notice and $100 off alarm.com rider and $100 off the Honeywell Notifier rider. Save up to $575.
Buy 3 or more All in One forms and get same as above and $300 off the third form and $400 off the fourth form. Save up to $1075.00 [Residential, Commercial, Fire].
Buy 4 All in One forms and get same as above and $400 off the fourth form. Save up to $1275.00 [Residential, Commercial, Fire, Home Automation]
Commercial Mobile Surveillance Lease $1000. Save $250
Fire All in One with Security Rider $1275.00. Save $300.00 Add the Commercial Fire All in One and the Commercial All in One and get $200 off each. Save $700.00
Qualifier Agreement $1200.00 Save $300.00
Digital Sign And Display Sales, Hosting And Service $437.50 save 50% $437.50
Computer Consulting and Service $437.50 save 50% $437.50
Nationwide DIY with monitoring. $3500.00 save $1000.00**
Nationwide PERS with or without GPS tracking. $3500.00 Save $1000.00**
All other contracts not listed above will be discounted 20% during the sale. Concierge Clients will receive an additional 10%. save thousands
* Your order must be placed on line at www.alarmcontracts.com and received by our office no later than January 12, 2024 by midnight EST. Orders must contain valid credit card payment and be processed; you will receive confirmation. Fill out the order form; the full prices will show and we will apply the discount before processing the order. Orders arriving after sale ends will be processed at regular published rates. Orders will be processed in order received. For Rush orders, delivered by email within 48 hours, add 15% - call Eileen to process.
Concierge Clients will receive their Concierge Program Discount on the Sale Price. Sign up for the Concierge Program before placing your contract order to receive the additional discount.
** Does not include consultation or modification
What's our Guarantee policy re updates?
Free updates within 6 months of purchase***
Half price within 6 months to 1 year***
*** applies to original purchase only
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Receiving check from someone other than your customer
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Ken,
We signed an agreement with a company under one name;
received a payment but check is from a different company.
Any issue or anything we should do or note?
Jeff
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Response
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I repeatedly and consistently counsel that you should do no work without a contract. It should be obvious that the contract needs to be signed by the party for whom you are doing the work.
While your question seems common and easy enough it actually raised a few interesting legal issues, none of which you want to have to deal with.
Let’s start with the collection side. You’ve been collecting payment from ABC Corp or from John Doe for your services [anything from sale, installation or after install services]. Your contract is with XYZ Corp or with John Smith. One day you get a letter from a Bankruptcy Trustee for ABC Corp or from John Doe who wants to know why you’ve been getting money. When you produce your contract it’s not going to be with ABC Corp or from John Doe, and the Bankruptcy Trustee is going to demand the money back.
How about the liability angle? ABC Corp or John Doe pay you. Then there is a loss; ABC Corp or from John Doe or their attorney or insurance company seeking subrogation demand damages. You produce the contract and smugly point out the protective provisions. They however call your attention to the fact that neither ABC Corp or from John Doe signed the contract; they are not bound by the contract.
You next comment is that since they didn’t sign the contract they aren’t the customer, contract says “no third party beneficiaries” and you owed them no duty. Their response is, “well we paid you all these months for service and you accepted the payment and did the work, and we don’t know anything about a contract because we never signed one”.
In either the collection or defense scenario you are the one facing the uphill battle. You will have to prove that the paying party received adequate consideration for its payments and you will have to prove that the contract with its protective provisions binds the non-signing parties.
It would be much easier to insist that the party paying you is the party who signed the contract or assumed the contract with your consent. The K&K Assignment and Assumption form is recently added to the forms available at www.alarmcontracts.com.
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STANDARD FORMS Alarm / Security / Fire and related Agreements
click here: www.alarmcontracts.com
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CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304.
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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
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com
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