Even though it’s been around for many years, there still seems to be confusion over the Federal Trade Commission’s 3-day Cooling-Off Rule, and similar state laws, for home solicitation sales. Reviewing electronic security contracts I am often surprised that some companies do not include the 3-day right to cancel language required by law, simply from oversight or misunderstanding the law. So, when do you have to comply with the three-day right to cancel? And how do you comply—especially in this age of digital contracts? Continue reading
If you’re involved in litigation related to the alarm industry, you know–or have heard legend of–Jeffrey Zwirn. He is a darling of plaintiffs’ attorneys, and seems to be involved in every high profile case involving allegations that a security alarm system failed. Zwirn has made a living, it seems, by targeting large alarm companies. But this time did he go too far?
Apparently back in 2010, Zwirn filed a qui tam action against ADT and Tyco. Qui tam actions are a type of civil lawsuit, allowing a private citizen to bring a claim under the False Claims Act, on the grounds that an individual or a business is defrauding the government. The private citizen sues to recover funds on the government’s behalf, and a percentage of any recovery goes to the private citizen who brought the claim.
In Zwirn’s lawsuit he claimed that ADT and Tyco made false representations to the government about the alarm systems installed in federal courthouses and judges’ homes concerning their compliance with the law and industry best practices.
The government investigated and declined to intervene in the lawsuit. The court recently concluded that the allegations are meritless and dismissed the action. It will be interesting to see if and how this affects Zwirn’s work for the plaintiffs’ bar.
Read the court’s opinion here: US ex rel Zwirn v ADT Sec Services Inc
The North Carolina Carolina Attorney General filed suit yesterday against now-defunct alarm company ISI Alarms NC, Inc. and its owner, seeking civil penalties for automated calls (a/k/a “robocalls”) the company made to consumers.
The AG alleges that more than 1,000 North Carolina consumers contacted his office to complain after receiving robocalls that claimed that the authorities, including the FBI, had received reports of recent break-ins in the area. The automated message prompted consumers to press a certain number to learn more about recent crimes in their area. Consumers were then transferred to a call center operated by ISI Alarms and heard a pitch for the company’s home alarm system and alarm monitoring services. The automated message gave listeners the option to press a different number to stop the calls, which consumers said did not work.
The Complaint alleges that thousands of such calls were placed to North Carolina home and cell telephone numbers on behalf of ISI Alarm during the past two years, and that the company saw its sales quadruple as a result.
Many consumers who reported getting these unwanted calls had listed their phone numbers on the Do Not Call Registry. Under both state and federal laws, it’s illegal to make most commercial telemarketing calls to home and mobile telephone numbers listed on the Do Not Call Registry. North Carolina law also makes sales calls that use recorded messages illegal even if the call recipients haven’t joined the Registry.
The Complaint also alleges that the AG’s office contacted the alarm company about the complaints, but that the calls continued. And, the alarm company refused to disclose the contact information for its lead generators, who actually placed the calls on the company’s behalf.
The AG has asked the court to award $500 for the first violation, $1,000 for the second, and $5,000 for all successive violations of the North Carolina Telephone Solicitations Act; or $5,000 for each violation of the state’s Deceptive Trade Practices Act.
Read the complaint here: ISI-Alarms-Filed-Complaint.
The Minnesota law I wrote about this spring (http:/wp.me/p3fru5-4G) has been enacted effective August 1, 2013. Fortunately, the law was changed substantially from its original iterations, which effectively sought to do away with exculpatory clauses altogether.
The new law simply codifies existing case law in Minnesota–that is, it makes exculpatory contracts void if they attempt to exculpate for anything other than ordinary negligence. Thus, as has always been the case in Minnesota, your contracts can limit your liability for negligence, but not willful and wanton or intentional acts.
The bottom line: If your contract says you will not be liable for “negligence in any degree” (as many contracts do), then it is void and you need to have it redrafted.
Read the law here: HF0792.1.
Sorry, ADT. I am not trying to pick on you. You’re so big and have so much litigation that there’s just a lot to write about. This time, it is a putative class action lawsuit that has been filed against ADT in California, taking aim at the alarm contract’s early termination fees and mid-contract price increases. The plaintiffs claim that ADT has a “never let them go strategy”– it tries to rope its customers in with promises of low monitoring fees that then get raised during the contract period, and it has long contract periods that are costly to escape, even in cases where a customer is dissatified with the service. Should this lawsuit cause other alarm companies to be concerned? Continue reading