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what happens when dealer doesn't pay central station February 13, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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what happens when dealer doesn't pay central station
February 13, 2018
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what happens when dealer doesn't pay central station
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Ken,
    My central station is sending out cancellation notices to my customers and are going to purge my account base and is not sending me my accounts master file account database, because I am behind on payments to them, but they are not working with me for a repayment plan.
    Can they do that?
    What liability will fall on them or me if my accounts are not being monitored and something happens?
    This has happened before and I lost a lot of customers, but we were able to come to a payment agreement, but the letters were already mailed out and the damage was done. Is there any recourse for loss of monitored customers?   
    In 30 years I have never had a central station do this.  I am done with this company and working on moving to a different central station.  Please let me know your thoughts.
Thank you
name withheld
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Response
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    My thoughts are hardly what you hoped to hear.  
    A good part of my legal practice is serving as a fiduciary, I am a United States Bankruptcy Trustee for over 40 years.  I think like a fiduciary and a lawyer, and with that combined perspective I think one should pay their bills and meet their responsibilities.  What does paying the central station have to do with fiduciary responsibilities?  You are charging your subscribers for monitoring services, services that you have engaged the central station to perform.  As a dealer all you do is send the bill and collect the money.  A small percentage should be carved out for the central station.  A central station would be within its rights to require monitoring accounts receivables to be sent to a lock box and bank account under the control of the central station.  After it takes its monitoring charges it can remit the balance to the dealer.   This shouldn't be necessary.  You're charging $24 bucks a month and can't remit the $4 to your central station?  Sorry, my sympathy lies with the central station.
    When you select a central station you have to read the "fine" print in the agreement.  What remedy has the central station laid out in the event you don't pay your bill?  There is nothing wrong with the central station having, as one of its remedies, the right to communicate with your subscribers and offer to monitor directly for them.  You have defaulted in your payments.  In my mind you lose all standing to object.  Think the remedy is excessively harsh?  Well, then don't default, and if you have defaulted or are about to default for whatever reason, you should be the one to initiate discussions with the central station about ways to clear up your obligation and move forward.  Don't wait until the central station loses patience and takes action.
    Your central station's obligations and duties are specified in its agreement with you, as dealer, and perhaps with agreements directly with your subscribers [if the central station was smart enough to get a three party contract signed - or just a direct contract with the subscriber - and BTW, I checked and you don't seem to use the Standard Form Agreements, so your central station would be wise to have direct contracts with your subscribers].  The agreement with you and the subscribers will cover the central station's right to terminate monitoring services.  Notifying the subscribers that monitoring is going to be terminated, even if not required by the contracts, is the responsible thing to do.  I can't see how you would complain about the notices.  Of course you could have provided in your agreement with the central station that it could not communicate with your subscribers under any circumstances.  I haven't seen your agreement and I have no idea what you agreed to.
    I don't know if you are entitled to your subscriber data electronically, or at all.  What did you agree to with your central station?  
    You states that you have never had this in 30 years, right after you state that you had this problem before.  Thirty years is a long time to engage in the alarm business and you shouldn't be having these problems, unless the financial issues are unrelated to the operation of the alarm business, and if that's the case then I am sorry.  But I don't see that you use the Standard Form Agreements, so I can't give the benefit of doubt.  I think you need to re-think how you conduct your alarm business.
    As far as leaving your current central station and going to another one, well that's why I didn't print your name.  You might find it hard to find a central station willing to accept you.  Maybe try one of the central stations that aren't listed on The Alarm Exchange.  I'm not involved with them and they certainly aren't influenced by me.  *********************

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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
516 747 6700
www.KirschenbaumEsq.com