Why It’s Vital to Send Out Copies of the 3-Day Cancellation Notice
Question:
Why is it necessary to send out two copies of the cancellation form when it’s already on the contract itself?
Answer:
You are referring to the three-day cancellation notice. This notice is required by statute in every state, and by Federal Law. The notice is required for all door-to-door sales for residential contracts. For an easy and perhaps over simplified explanation of what door-to-door sales mean, the test is whether you had to visit the residence at any time prior to the contract execution. So, if you go to the house to survey it and then mail the contract to the subscriber, you need to provide the three-day notice of cancellation. If you have a retail store and the subscriber comes to you, signs a contract at your store and you then go and install the system, you don’t need to cancellation notice. Of course, when you send high pressure salespeople (even if not so high pressure) knocking on doors or visiting residences after the subscriber answers an ad and invites you to the house, you need to comply with the three-day notice of cancellation.
The two notices are you referring to are quite different and both are required in most jurisdictions. The first notice, required in all jurisdictions, is the notice that appears on the contract immediately above the place reserved for the subscriber’s signature. That notice usually lets the subscriber know that there is a three-day cooling off period and it refers to another form that explains certain rights regarding the cancellation process.
The second notice is the actual form that the subscriber uses to cancel, by signing and sending it to you. Not every state specifies the exact form of cancellation, and some states permit any form by the subscriber to be used. Because states have different statutory requirements, the residential contracts need to be customized state by state, which we do when we provide the Standard Residential Form Contracts.
It’s important to comply with the cancellation notice and process because in most jurisdictions the subscriber can cancel up until three days after the notice is provided, even if you have already installed the system. You can be in a bind and you’ll have to remove the system and restore the premises. Another issue that can come up is violating your state’s deceptive business practice laws if you blatantly and persistently ignore the cancellation law. The enforcement agency in your state could take the position that you have to offer cancellation and refund to all of your subscribers, not to mention fines (just in case you can survive the subscriber cancellations).
If your contracts do not have the cancellation notice and statutory form, then I suggest you update your contracts today.
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About the Author
Ken Kirschenbaum, SSI Contributor
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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