January 31, 2012
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Electronic contracts
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Ken,
Regarding the salability of contracts based on original paper contracts vs. scans; and the ramifications of electronically signed contracts...
I see a distinction between using scans for legal defense or collections, as opposed to selling the accounts to another dealer. A previous article suggested that a buyer might want to insist on an original, signed, paper contract set.
It appears we must have had a crook out there selling contract scans to more than one buyer. I'd like to hear some stories about that, particularly the methodology of the fraud. Can anyone enlighten us? (This certainly says a lot about the trustworthiness of one's alarm dealer ! )
If I were buying accounts from someone I knew and trusted for many years through an alarm association, it would certainly reduce my reluctance toward the scanned contracts. However, I would still want to take possession of the paper customer file folders with billing records, service records and original contracts to the extent they exist, if for no other reason than to keep them under my own control.
OK, now I have it all here. What says the seller didn't keep a set of scans or photocopies? Would it not make sense for them to do so as a safety measure in case of a default on the buyer's part?
I'd say that whether scanned or paper, part of the buyer's due diligence should be to confirm by more than one method of audit that the accounts are valid and not previously sold. What would a crooked seller do, close cash deals with two buyers on the same day? Or blend a few duplicate sales into a clean batch of contracts? How often does such fraud occur? Are we buyers completely paranoid because some dealer did it once, or is it an ongoing scam? I've bought accounts and I know that sellers would naturally be inclined to include even the most iffy, delinquent contracts that could potentially generate revenue. Do scans increase that potential in some way? Isn't that a good reason for some level of a "hold back?"
Now let's consider why we're scanning our contracts in the first place. My own reasons include:
Backup in case of destructive calamity or a misplaced contract
Searchability
Quick retrievability for defense or collection reasons
Easy reference
Ability to have multiple backups at minimal cost
Reduced storage space for backups
Clearer reproduction and transmission than fax (that fine print keeps getting blurrier and blurrier)
Ease of transfer of multiple documents
I should think that the searchability and ease of retrieval alone should greatly expedite an account review / audit and thereby enhance the collective value of the accounts to a buyer. That's not to say we would ever shred the original contracts, at least not until a few years after the account has closed, the structure is demolished, the system has been removed and/or the client is deceased.
Ok. Now, suppose I have a bad office fire. Are my accounts based on scanned contracts automatically worth less (and how much less) solely because I could theoretically resell them four or five times? Isn't the potential identical with or without the paper?
(Sign me as anonymous for those who won't otherwise recognize my writing style, please)
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Dear Ken,
I would like to comment about a couple of observations that were noted by David Myers regarding ink signatures vs. digital contracts (Jan 13, 2012). David said that, "financing sources that he uses will accept nothing but inked originals mainly because they've been scammed in the past by people trying to sell multiple copies of the same contract"
As a company that leads in the supply of digital contracts to security companies across North America, we are aware of major funding sources that accept our Digital Contract and electronic signatures. Large dealer programs are also implementing these digital contracts and will use them for their own sales and technical teams. Both of these sources will provide top multiples in the industry, with no penalties, because the contract is digital. Regarding "inked originals", the reality is that contracts with ink signatures can easily be forged or fabricated which is why good-faith business practices should always be followed. Organizations who previously held a similar policy with respect to purchasing or funding inked originals are now purchasing our digital contracts.
Another reason that funding sources and dealer programs are drawn to our Digital Contract, and are willing to pay top multiples, is because they greatly decrease their administration costs as a result of reduced data-entry hours. Because credit checks naturally increase the value of your "paper", it is important to note that the Digital Contract also includes the ability to do a credit check, on-the-spot.
Many of your readers already know that on June 30, 2000, President Clinton signed into law the Electronic Signatures in Global and National Commerce Act ("ESIGN"), which made signed electronic contracts and documents as legally binding as a paper-based contract.
As always, we would be pleased to discuss with your readership how Kirschenbaum Contracts tm can be used within our Digital Contract solution.
Rod Donison “ Director, Sales
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eOriginal
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Ken,
I wanted to reach out to you and introduce myself. While attending the ESA/ESI this week in Irving Texas, many of eOriginal's clients and prospects had suggested that I reach out to regarding questions that you sometimes receive regarding e-signature and eContracts. eOriginal has been around for 15 years, participating in the drafting of various pieces of legislation including, ESIGN, UETA and UCC 9-105 (electronic transferable records). Our application was actually used as the focal point for the UCC 9-105 requirements. Our experience working in the transferable records space; electronically selling and securitizing billions of dollars in negotiable instruments has helped to make many of the industry funders comfortable with our technology. We started working with alarm companies 3 years ago, but over the course of the past 6 months have really expanded our footprint.
John J. Jacobs
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Follow up on New York workers comp insurance
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Stu is right on! The State Insurance Fund coupled with a Safety Group is the best deal in NY for workmanship comp insurance.
Bob
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Ken
The State Insurance Fund is not the Cheapest around when you factor in the audits every year. They are relentless pain in the ---.I use Traveler and the audit only takes a few minutes on a form they provide you with, and then you e-mail them all your insurance cert. DONE. Not the in house audits that they can do which is nothing more than a fishing net, for them. Audits are not CHEAP.
SEM
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More comment on ASAP-PSAP business model
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Ken
Lots of debate in the Newsletter about alarm industry issues, like the ASAP-PSAP Program, adds more value to the Newsletter.
Mark is correct in the 1.28.12 Newsletter, some of us do not understand all the operational and technical details of the ASAP-PSAP proposals. However, some of us are trying to understand the big picture, the business model.
For example, if the proposed Program had been operational in San Jose CA (recent Verified Response city) wherein most of the monitoring firms say they have been practicing Enhanced Call Verification/ECV (big stretch), 12,000 unnecessary emergency calls were relayed via voice. Correct me if I am wrong, ASAP-PSAP would send the same 12,000 calls for help via a data link, instead of voice link. Is ASAP-PSAP simply a more efficient and less costly standard that delivers the same result?
Suggestion; add a small fee ($10?) paid by every sender for every data transmission to PSAP.. .it would help to get better ECV compliance. The good guys are rewarded, the sloppy guys are penalized.
Lee Jones
Support Services Group