‘Evergreen’ or Evergreed Clauses?

If you are like most people, at some point you have been billed or charged a late fee you believed to be in error or unfair. If so, you are all too familiar with the frustration and aggravation caused by such entanglements, especially when the billing party is unreasonable and impersonal. It pains me to say that sometimes that billing party is an alarm company.

Recently, I came across a string of Internet posts from current and former alarm customers who are outraged about the auto-renewal, or “evergreen,” clauses contained in their alarm monitoring contracts. These provisions, also popular in other industries, indicate that the contract is automatically renewed, usually on an annual basis, unless the customer gives notice to the contrary. The clause prevents expiration without approval by the issuer.

In one particular case, a retired couple sold their long-time residence so they could travel the country in a motor home. These folks had been model alarm customers, steadily paying their monitoring fees for nearly 15 years before opting to cancel service. But when they attempted to do so they were informed they were responsible for paying the remaining 12-month period monitoring balance.

The couple, now completely reliant on Social Security income, tried to get the buyers of their home to continue on with the existing alarm company – the fourth one that had owned the account since its inception – but they were not interested in what had become an old, outdated system. Ultimately, after much unpleasantness, the alarm company reluctantly agreed to accept a lesser amount to close out the account.

Auto-renewal clauses are necessary when companies offer no- or low-money-down residential systems and have to make the money back through subsequent monthly monitoring charges. It can take three to five years to recoup the initial investment in equipment and labor to begin turning a profit, and even that has to also pay for sales, marketing, administrative and other costs. Auto-renewal contracts lower those expenditures by minimizing the burden necessary to re-sign a customer. Plus, “locking up” a customer makes it difficult for a competitor to “steal” them away.

I am a firm believer in binding contracts and holding defaulting parties accountable for such agreements. I also understand an alarm company’s worth is often estimated by its projected recurring monthly revenue (RMR) and the only concrete way to demonstrate that to a lending institution or perspective buyer is through signed, long-term monitoring contracts.

Regardless of all that, above all I believe common sense and fairness should dictate all actions. Failing to consider the circumstances why a customer defaults is reprehensible and, in instances such as the one just discussed, unethical. Our mission in this industry should be looking after the welfare of our customers and making a reasonable profit in the process. Ensuring well-being and greed are in opposition.

Our industry has already suffered enough negativity due to false alarms and mismanaged dealer programs. And taking the stance that when other firms mistreat their customers it sends them your way is not the answer. Anyone conducting themselves in such a manner tarnishes the entire industry, and many of those spurned customers will turn their backs on all alarm companies.

If evergreen clauses are legal in your area (five states have banned them), make sure they are not hidden in your contracts, and openly explain the rationale to your customers. If they should default during the initial term of a multiyear contact, find out why and make a just decision whether to hold them liable. If the annual auto renewal has kicked in, find out why and see if the account can be saved – but do not hold them liable.

Let’s be known as the industry that cares, not the monthly monitoring mongers.

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About the Author


Scott Goldfine is the marketing director for Elite Interactive Solutions. He is the former editor-in-chief and associate publisher of Security Sales & Integration. He can be reached at [email protected].

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