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Question:  Finance Charge And Late Fees 
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Ken
    I can't seem to find where we disclose finance charges and late fees in our contracts. Am I just missing it?
Kindest Regards,
JPM
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Answer
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    The Standard Form Contracts do not have provisions for finance charges, late fees or interest [some versions may have interest].  We can add those for you but I have intentionally omitted them from the agreements.  Why?
    First finance charges.  Unless your contracts comply with Retail Installment Contract laws you shouldn't be charging "finance charges".  A finance charge is interest charged on an sale and installation that is paid over time.  You are required to disclose the total payments and the total interest and principal paid over the payout.  Alarm transactions are not typically retail installment transactions.
    You are entitled to charge interest at your state's legal rate without having it in the contract.  In New York the legal rate is 9 per cent per annum and therefore a delinquent payment can be charged interest.  A payment is delinquent if not paid within the designated or agreed upon time, either "on receipt" or first of the month" or some other time frame.  If you want to charge more than the legal rate you need to include that in the contract.  So if you want 1.5 per cent per month you have to specify that charge.
    Same goes for a late charge.  You can't charge it unless it's been agreed to in the contract.  A late charge, and interest exceeding the legal rate,  for that matter, must be reasonable or it will be deemed a penalty and thus unenforceable.  
    A late charge or punitive interest charge is not likely to get your subscriber to make its payment any faster or more reliably.  In fact, I think it's just as likely that a subscriber who has decided not to pay you on time or at all is just going to get more annoyed by persistent late charges and excessive interest accumulation.  
    Keep in mind that the RMR model in this business, which the Standard Form Contracts are designed to encourage and capitalize on, already come with a stiff remedy if the subscriber fails to make a payment; the balance of RMR comes due, and you can discontinue services.  That is a pretty harsh consequence.  Why add late charges and excessive interest?  It will only encourage a Judge to try harder to figure out how not to allow you to win your collection case.  Accelerating the balance of the remaining contract payments and collecting 80% of that amount, plus your legal fees, legal interest and court costs should be enough.  Don't be a pig.  Pigs get slaughtered.
    There is one argument I have heard favoring late charges.  If you have enough subscribers and add the charges automatically to over 30 day payments you may find that many subscribers automatically make the payment in the amount reflected on the invoice.  So it your $24 a month becomes $29 with a $5 late charge you may collect the increased amount from enough subscribers to offset the few that get annoyed enough to cancel.  I think you'd need a rather large subscriber base for this to make sense.  
    Let us know how you handle late fees and other charges.

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Comment on taking over fire alarm systems
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Ken
    Happy 4th of July to you Counselor.
    To further add to the comment below there are System sold by Bosh Honeywell (Ademco) which are UL listed for Fire and Burglary systems.  Your comments about licensing, and compliance with AHJ requirements are right on the mark.  If we “take over a system” we check every connection in all junction boxes and do a complete test of both systems.
    Oh yes still hanging around after 38 year in the business
Your truly
Johann J “Jim” Nortz, Managing Director
ABACS.NESCA
Brattleboro VT 
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