KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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FTC click to cancel rule and how it affects alarm contracts / ISC meeting times limited – reserve now 
October 29, 2024
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Time is running out.  We will soon be closing the meeting time opportunities. Schedule your free private meeting with KK at ISC East
No "last minute" meetings will be scheduled.

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    If you're interested in a private [yes, it's free] meeting at ISC East [we will be meeting just outside the exhibit hall] please contact Stacy Spector,Esq at 516 747 6700 x 304 or SSpector@Kirschenbaumesq.comConcierge Clients will have priority.

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FTC click to cancel rule and how it affects alarm contracts 
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Ken,
    You’ll probably be asked about this by others. I’m sure the FTC’s click to cancel rule will gladly lump the security industry in with this mess if they are able to.  Not sure if this is relevant for our industry, but thought it might be fuel for your newsletter, if you’d like to opine on the matter.  
Jon Kelch 
Chisholm Security LLC
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Ken, 
   What if anything is there to know about new FTC rule making it easier to cancel subscriptions and memberships as it pertains to our Alarm business?
Thank you,
Scott Herron
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Response
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          The FTC is busy issuing regulations as the Biden term winds down.  The newest regulation, called “click to cancel” affects all industries, including the alarm industry.  The rule applies to agreements with “negative options”, which as far as we are concerned means the automatic renewal provision tied into the automatic payment or even keeping the credit card or ACH on hand and hitting the card or account for auto pay. 
          The automatic renewal clause is a staple in the security and fire alarm industry [as always I include cameras, audio and any form of electronic device monitoring and notification].  Every K&K Standard Form Agreement [except those with no RMR] has an automatic renewal provision.  There are a number of reasons for the auto renew provision:
     For a practical common sense reason:
 *  the security or fire alarm device or other devices provide life safety monitoring or at least deterrent [as opposed to prevention]. It would be dangerous if the service simple stopped when the contract ended.  Sort of like when my credit card info changed and Dish Network shut off my TV reception without notice.  We can’t have security or alarms shut off without notice, and we also don’t want the burden of providing that notice to the customer.  On occasions customers do accept the responsibility of automatic – no notice – shut down, but that is exceedingly rare.  So it’s neither practical nor safe to permit these contracts to come to an end and there is no reason you should be put to the burden, and risk, of providing notice.  We can’t know if a customer will get the message of cancellation, or remember they got it, after an event previously covered by the alarm system, occurs. 
  * When it comes to some systems, fire in particular, but also environmental monitoring, the AHJ requires notice of termination in advance.  More than one AHJ has decided that a permit would be required to remove a fire alarm.
  * The alarm industry may not have invented the RMR model, but it certainly embraced that model, and any alarm contract with after-install services will always have an automatic renewal clause.

       Automatic renewal provisions are used in all states, and some states already have laws regulating the automatic renewal provisions.  The K&K Standard Form Contracts are customized state by state to comply with these various state laws.  K&K is making changes to address the FTC ruling, only because the K&K Contracts already have these provisions, though not in required format.  I suspect this FTC ruling will be held to be unconstitutional because the FTC exceeded it power, which does not include legislating new laws.
       Generally the FTC click to cancel rule requires that certain provisions be “clear and conspicuous”.    The provisions that must meet this criteria are:
      * increase after a “trial period ends” [this is not likely going to affect alarm contracts]
      * deadline when consumer has to cancel, the amount that will be charged, and a simple way to cancel

          Additionally the consumer’s consent to being charged for the automatic renewal must be in a separate document, which you are required to maintain for 3 years. 
          K&K is updating the consumer contracts to comply with the new rule, primarily by re-formatting the consumer contracts.  The updated contracts will be available by the time this article is circulated.  Update your contracts today
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K&K Holiday Party - Save the date:  December 12, 2024
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STANDARD FORMS  Alarm /  Security / Fire and related Agreements
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com