Don’t Resort to Tricks, Gimmicky Marketing Campaigns to Earn New Alarm Contracts

Some companies will try to market a security system on the basis of having “no contract.” But is this true?

I HEARD A RADIO AD for alarm services “with no contract.” The company was “Think” something or other. I also saw a print ad in AARP (yes, I am a member) for “Simpli” or something like that. These companies not only offer alarm services with “no contract” but denigrate other alarm companies because they do require subscribers to sign contracts.

The problem is at least one of these companies, the “Simpli” one, does require that a subscriber agree to terms and conditions. I am curious where this company got the lawyer who told them that agreeing to terms and conditions isn’t a contract.

What I believe these companies mean is that they don’t require a subscriber to agree to a long-term agreement; the customer can cancel anytime. That’s not the same as alarm service without any contract. It’s going to be interesting to see what happens when one of these companies has a claim against them and tries to defend based on their contract provisions or terms and conditions.

The plaintiff’s lawyers will be playing the radio spots and presenting the print ads to the judge and jury to advance the argument that the poor plaintiff (who we know is deemed the least sophisticated consumer) was duped. The argument will be made that the plaintiff was fraudulently induced to accept services from the alarm company under the belief there was no contract.

Right now the alarm industry is not restricted in length of term or how much it can charge. Do you want to see that legislation? I didn’t think so. Keep pushing the envelope and see what happens.

I recently received an “IMPORTANT NOTICE” in a flyer delivered with my morning newspaper. I suppose I was one of many “lucky” recipients of ADT’s offer to give me a “FREE WIRELESS HOME SECURITY SYSTEM” that has a value of $850. All I had to do was allow ADT to display its “small ADT security sign” on my front lawn. Since I was still disappointed at not having won the billion-dollar Powerball lottery, I thought perhaps my luck had changed. Before I got to the many benefits of this free offer I did see in microscopic print that “important terms and conditions” were below, also in small print.

The only “terms and conditions,” important or otherwise, for my free system was that there was a “$99 customer installation charge and 36-month monitoring agreement at $36.99 a month.” On a more positive note, “same/next-day installation based on availability” was possible. Perhaps the three-day notice of cancellation doesn’t apply to this special free offer. Further reading disclosed that “ADT Theft Protection Guarantee” was included, though in smaller print “certain restrictions apply.”


Read Next: The Importance of Futureproofing Automatic Renewals for Alarm Companies


I wonder how many people reading this flyer would know that this offer is the very same offer always available by ADT; that the certain other restrictions and conditions include a bunch of disclaimers, an exculpatory and limitation of liability clause, among others, and that trying to cancel early comes with penalties. This is the kind of marketing that lends itself to criticism by consumer affairs agencies and state attorney generals.

Maybe I am being overly critical, but just the other day it was announced that the New York Attorney General had reached a settlement with several health gym clubs. The gyms paid fines and penalties after the investigation revealed widespread violations of law including required disclosures to consumers. In New York, it’s against the law for a gym contract to lock the customer in for more than three years or charge more than $3,600 a year, and apparently these gyms were not in compliance.

What’s the connection? Questionable practices that may raise issues with consumer agencies can affect the alarm industry, not just one alarm company. ADT, perhaps bigger than everyone else combined, certainly carries a target on its back. Its practices affect other alarm companies that often emulate the obvious success of ADT’s marketing strategy.

Right now the alarm industry is not restricted in length of term or how much it can charge. Do you want to see that legislation? I didn’t think so. Keep pushing the envelope and see what happens. We all need to be mindful of how consumers will perceive and receive marketing material. Interestingly enough, the flyer I got might technically violate a New York state licensing requirement and subject ADT to a fine, but that’s not your problem.

My advice is stick to the plan. Use proper contracts; deal honestly with your subscribers; build your RMR; get fixed term agreements, five years residential and 10 years commercial, with month-to-month renewal thereafter. Regularly upgrade your subscribers’ services and your alarm contracts.

About the Author

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Security Sales & Integration’s “Legal Briefing” columnist Ken Kirschenbaum has been a recognized counsel to the alarm industry for 35 years and is principal of Kirschenbaum & Kirschenbaum, P.C. His team of attorneys, which includes daughter Jennifer, specialize in transactional, defense litigation, regulatory compliance and collection matters.

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