Early termination fees have been quite the norm in the home security services industry for a very long time. However, reactions to this trend have been mixed throughout, with quite a few people not taking very positively to the fees. Questions have once again come to the fore with the Hogan vs. ADT class action lawsuit, which claims that the early termination fees charged by ADT are unlawful. The Federal Court complaint filed in California poses some intriguing questions to the long-standing contract policies prevalent in the home security industry.
The plaintiffs’ charges are primarily based on two practices. First of all, ADT charges all of its subscribers an early termination fee if they cancel their account prior to the contracted time. The case Hogan vs. ADT also questions ADT’s practice of increasing the recurring monthly revenue (RMR) after the initial year. ADT, however, hasn’t filed an answer yet.
The responses of consumers as well as industry experts on the issue are almost equally divided. About half of the people believe that early termination fees are legitimate, as the have the right to recover their initial costs. The other half, however, believe that this practice is just an anti-competitive way of handcuffing the customers and making money. These objections are also based on the fact that many subscribers simply hire ADT to monitor their existing . This means that as such, ADT did not incur any cost installing the , and any termination fees upon cancellation are simply a windfall.
The complaint also states that ADT fails to comply with its own contract terms. There is also the mention of long contract periods. Plaintiffs claim that ADT’s contract terms are much longer than what is actually required to recover the installation costs.
There is no less expensive way for a customer to do business with you than apolicy of 100 percent down [and] no easy monthly payments,” said George Tanguay, president and chief engineer for North American Security in Clarkston, Ga. “If you can’t earn your customers’ business each and every day, you do not deserve to keep them.”
Experts have also suggested that ADT should give its customers some leeway in contract durations, as well as termination fees – even if it means that they have to increase the installation charges. A business must be based on trust, and if ADT provides reliable services to customers, they will keep their contracts and remain loyal to ADT without the need of compulsive contracts.
Kris Murphy
Author – Kris has been learning the ropes, but already has 4 years of industry experience working with us. He is in charge of researching our security system reviews and putting together new content for our site’s blog section.