ADT Faces Lawsuit for Early Termination Fees, Unfair Rate Increases
WALNUT CREEK, Calif. — ADT customers have filed a federal class action lawsuit against the firm that targets the penalties ADT imposes for early termination. The lawsuit also states the company unilaterally increases monitoring rates while consumers are under contract for lesser fees.
Law firm Bursor & Fisher, based here, filed the lawsuit in the U.S. District Court, Central District of California, in behalf of all consumers who purchased home monitoring services from ADT. The proposed lawsuit consists of two groups of consumers. The first includes all current and former ADT subscribers who were charged or are subject to being charged an early termination fee. The second group contains past and present customers whose rates increased or are prone to increase without prior notice.
Calling the termination fees “the lynchpin of ADT’s ‘never let them go’ strategy,” the lawsuit states the termination fees are unlawful penalties used simply as an anti-competitive device and do not compensate ADT for any true costs of breach. It further notes that ADT unilaterally imposes the penalties, even when failing to perform promised services, thus violating consumer protection statutes in California and Illinois, as well as similar laws nationwide.
The plaintiffs also seek reimbursement for ADT’s unilateral monitoring rate hikes, citing the firm increased the fees without proper advanced notice or receiving informed customer consent.
“ADT relies on small boilerplate text neither signed nor highlighted for customers to claim its ‘right’ to unilaterally increase fees,” according to a statement released by Bursor & Fisher.
In his “Alarm Exchange” newsletter, attorney Ken Kirschenbaum, who also pens SSI’s “Legal Briefing” column, notes the lawsuit was likely prompted by a recent settlement of similar charges against ADT made by the Contra Costa District Attorney’s Office. In that case, ADT paid $950,000 to provide restitution for residential clients whose rates increased during their initial contract.
“Class actions used to be reserved for drug companies with deep pockets whose products caused horrific injury to class participants,” Kirschenbaum said. “With the proliferation of litigation, almost any company that lawyers think can respond to monetary damages become a target, and ADT fits that description,” Kirschenbaum said. “The allegations are just that — allegations. Nothing has been proved yet. There may be no wrongdoing.”
For other alarm company owners worried they could face a similar lawsuit, Kirschenbaum suggests they use standard form contracts and conform their business models to the contract provisions.
“Whatever problem ADT has does not mean they will filter down to you,” he explained. “Even if ADT ends up settling or goes the distance and loses in court, there may not be consequences for you unless you have decided to copy and use ADT’s contract and mirror its business practices and model.”
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