Two high profile legal matters have been in the news involving allegations of alarm companies’ unfair and deceptive practices. What are these cases about? And what can you learn from them to protect your business from such claims? Read on to find out. Continue reading
Ask the Attorney: I am thinking about selling DIY security systems. Is there anything I need to do legally to sell DIY?
Even though your customer is doing the installation with a DIY security system, your business is subject to security alarm provider licensing requirements in many states (approximately 18) so if you plan to sell outside of the state where you are licensed, you might need to get additional licenses.
You will also need a new contract that is tailored towards the DIY product. The contract will have the same basic terms—including limitation of liability and damages—but the wording is slightly different for DIY contracts and you’ll want to include language protecting you from defects in the customer’s self-installation.
Wisconsin recently became the thirtieth state to follow the majority rule when it comes to consideration for non-competition agreements. It held that continued employment constitutes lawful consideration for a non-compete agreement signed by an existing at-will employee (i.e., one that does not have a contract). Continue reading
Ask the Attorney: I have started texting my customers about service appointments, is there anything I should add to my contract?
Yes, you will want to add a provision to your contract (or by a contract addendum, or separate written and signed disclosure) that the customer is giving consent to contact from you.
The Telephone Consumer Protection Act (TCPA) restricts telemarketing calls and the use of automatic telephone dialing systems and prerecorded voice messages. Under the TCPA, sending text messages or autodialed calls to cell phones requires previous consent from the recipient. The TCPA also governs calls and texts to land lines of residences and businesses.
Running afoul of this law can get you in trouble with the Federal Communications Commission (FCC), and subjects you to private penalties of $500 to $1,500 per call/message. Private penalties are typically sought via a class action lawsuit, alleging millions of dollars of damages on behalf of class members.
To satisfy the TCPA, a consumer must give express written consent and receive “clear and conspicuous disclosure” that the consumer will receive future calls that deliver prerecorded or autodialed telemarketing messages by or on behalf of the business. Here is an example provision to include in your contract (including email consent):
Consent to Telephone and Email Contact. Customer expressly authorizes [Alarm Company] to contact Customer using an automated calling device, text, or email to deliver a message to set/confirm a service/installation appointment, notify of alarm alerts, for marketing related purposes or other updates at the telephone number(s) or email address shown above (in addition to those currently on file with [Alarm Company]).
Ask the Attorney: If I am making changes to an existing Customer’s alarm system, should I have the customer sign a new contract or what else can I do to document the new equipment?
You can use either a new contract or an addendum. A new contract is especially appealing if you’ve updated your contract and would like the customer to sign the latest version; or if you’d like to lock in the customer to a new contract term.
You could, however, also do an addendum to the customer’s contract. You will want to reference the Customer’s current contract, note the changes being made, alert the customer that the terms and conditions in the current contract still apply, and have the addendum signed by the customer. This addendum language could be part of a work order/invoice, or a separate documents. And, as always, ensure you keep a copy of the signed document for future reference.
Ask the Attorney: Do I need to give the customer a right to cancel notice if he or she is an existing customer and I am merely servicing the system?
Whether you need to give notice of the right to cancel will depend on whether you are simply doing routine maintenance or service, or more (such as upgrading the system).
First, a refresher on the right to cancel: The Federal Trade Commission’s Cooling-Off Rule gives consumers three days to cancel purchases over $25.
The Cooling-Off Rule applies to sales at the buyer’s home, workplace or dormitory, or at facilities rented by the seller on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fairgrounds and restaurants. The Cooling-Off Rule applies even if the consumer invites the salesperson to make a presentation in their home.
Under the Cooling-Off Rule, the consumer’s right to cancel for a full refund extends until midnight of the third business day after the sale.
Under the Cooling-Off Rule, the salesperson must tell the consumer about the cancellation rights at the time of sale. The salesperson also must give the consumer two copies of a cancellation form (one to keep and one to send if they decide to cancel) and a copy of the contract. You should also have a third copy of the form that the customer signs acknowledging receipt of the form, which you keep. Further, the customer’s contract should explain the right to cancel directly by the place for the customer’s signature, in at least 10-point, bold font.
Getting back to the question: One of the exceptions to the Cooling-Off Rule is where a consumer’s purchase is made as part of a request for the seller to do repairs or maintenance on personal property.
So, if you are performing regular service or maintenance for a customer, you probably do not need to give the customer notice of the right to cancel, even if the amount owed is over $25. If, however, you are doing more than routine maintenance or service—say, for example, upgrading a system, or installing new equipment—then you will want to give the customer notice of the right to cancel.
Ask the Attorney: I have some customers that just want equipment sold and installed for them but not monitoring service, what, if anything, should I do to protect my business?
Just as your monitored customers could experience as loss, so could a customer to whom you sold and installed alarm equipment. So, even if you are not facilitating third-party monitoring, you will still want a contract to protect your business. This contract won’t be the same as a typical monitoring agreement, but will still have some of the same essential elements:
- A detailed description (type, manufacturer, model) of the equipment sold and installed.
- An Indemnity agreement.
- Limitations of liability and damages.
- A subrogation waiver.
- A notice of the right to cancel.
- The customer’s signature.
Sometimes it’s the little details that can make or break your contract. Attorneys pay a lot of attention to the larger—seemingly more important—contract terms, such as limitation of liability and damages, subrogation waiver and indemnity. But oftentimes it is something small, but no less important, that can spell doom (or at least a major headache). Continue reading
Don’t rest easy just because you have a contract with your customer. Whether your contract will be enforced by a court, or even applies at all if you are sued, depends entirely on what your contract says. Many alarm contracts I see, a staggering number actually, are riddled with errors that could make them useless. These contracts either simply don’t have the right provisions, or they say the wrong thing. This puts the business in jeopardy if a customer ever experiences a loss. Are you in that same boat? Here are some questions to ask your business. Continue reading
Rivalry among alarm business competitors might be fierce, but it also should be fair and legal. If your confidential information such as customer lists or pricing data get into the wrong hands, it could spell disaster for your business. As can a key employee’s departure to a competitor with all the details about your business in hand. What can you do to protect your business’ confidential information in the first instance? And what are your options if you are subjected to competition that is not fair and legal? Continue reading