KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Telemarketing liability issues / Personal guarantee / SimpliSafe marketing comment
December 29, 2020
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Telemarketing liability issues follow up to article on December 14, 2020
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Ken,
I’m responding to your item regarding telemarketing laws on December 14, 2020. I had a client who called me a few years ago to ask if they had to send 1099’s to companies that were not in the U.S. I asked him who the company was and what they did and they told me that it was a telemarketing firm and, since they weren’t in the U.S., they were “exempt” from the do not call rules.
I am not an attorney but I told them that that didn’t sound very kosher. Not sure if they continued to use this firm as they ceased to be a client soon after, and ceased to be a company a few months later.
What is your opinion on using an offshore telemarketing company to be “exempt” from do not call rules?
Mitch Reitman
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Response
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While a government regulatory or enforcement agency may have some difficulty taking action against a foreign business operation, it will have no such issue going after a US based business. The extent of that action can be devastating as reported in the December 14 2020 article on LifeWatch. Quick research didn't reveal whether foreign telemarketers are subject to US laws, but I would think they are if calling into the US. A US company engaging a foreign entity to circumvent US telemarketing laws is going to find out fast that it won't work, in my opinion.
Another issue is raised, and that is what responsibility does a company have if it engages a telemarketer who violates telemarketing laws? The answer is mixed. The relationship is principal and agent v independent contractor. If the telemarketer is truly independent the engaging company would not have liability, especially if it had no notice that telemarketing laws were being violated as a matter of course. On the other hand, if the engaging company has sufficient contact and involvement with the telemarketer then the company is going to have liability.
Use reputable telemarketers if you decide to use them at all. If telemarketers [door to door contractors and any other independent operation you engage to benefit your operation] fail to follow the law and you are aware of the transgressions you can expect to be held accountable.
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Personal guarantee
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Ken,
We have a builder that we are monitoring their model homes. The signer of the commercial agreement does not want to sign as the personal guarantee. I have concerns on striking anything and am unsure how to protect Duncan Security but get the signature. Please advise the quickest and easiest solution to protect the company but not hold the signer personally.
Kind regards,
James
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Response
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Your company is protected without the personal guarantee, though if you have to sue your corporate subscriber you won't be able to sue the owner without a personal guarantee. Unless you are making a substantial investment in the account you don't need the guarantee, even though it definitely adds a layer of comfort and potential source to recover in the event the subscriber defaults and is without assets. Corporate debtors often look to pay those creditors holding a personal guarantee from the owner. Don't expect to get a personal guarantee from a large corporation or from a corporation that the owner believes may default; the owner won't want to expose himself to liability in that case.
If you are getting paid for the installation or initial work, and getting paid in advance for providing your RMR services, then you would only be looking to the personal guarantor for the balance of the contract; it's not that significant a risk to kill the deal over the refusal to give the personal guarantee.
If you install a $20,000 system for costs or below cost, or nothing, then you have an investment in the account and you're entitled to all the security you want, including a personal guarantee from all but the most credit worthy subscribers [and they don't need to have you install for free].
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SimpliSafe marketing comment
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Say what you will about SimpliSafe, they know how to market. The other day Fox News was making a big deal out of a sweater that had lights and siren imbedded in the sweater that goes off if anyone gets to close; a covid-19 personal protection device. Free nationwide publicity. Clever marketing.
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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
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