waiting 3 days to do install but don't use the 3 day cancellation notice October 24, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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waiting 3 days to do install but don't use the 3 day cancellation notice
October 24, 2018
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waiting 3 days to do install but don't use the 3 day cancellation notice
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Ken:
    I use your Standard Form contracts and have never used the 3 day cancellation notice because I never install them until the 3 days are over.  I have never had an issue in the 18 years that I have been in business.  Am I missing something here that could cause me problems in the future?
Thanks.
John 
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Response
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    I am not in one of my brutal moods, so I'll be gentle. It is not surprising that you have not had a problem in 18 years in business over the cooling off period. But be prepared to pay the piper soon. When? When you go to sell your RMR contracts [assuming you have any].
    We don't see residential alarm subscribers exercising their cancellation rights very often. Most alarm companies are not engaging in high pressure sales practices, or deceptive practices, and the customers genuinely want the product and services. Your practice is to wait 3 days before doing an install, so your customers do have an opportunity to cancel. You don't mention how many actually do cancel, and the problem is that they don't know that they can cancel. At least that's the purpose behind the cooling off laws. In this day and age of communication most likely all but the most uninformed know about the 3 day cooling off period. But, courts over and over again set the standard for the consumer as the least sophisticated consumer. Trust me, that consumer doesn't know about the cooling off period. 
    To be clear, the fact that you wait 3 days to do the install after the contract is signed is not compliant with the cooling off law. The 3 days does not start to run until the notice is given. If you don't give the notice then it never runs. The cancellation can be exercised years later.
    On a singular basis the risk you run doing the installation within the 3 days is that the customer can require you to return any money paid and restore the premises. You may, and in fact you apparently are, willing to accept that risk. However, on a collective basis you have put your entire residential portfolio of subscriber accounts at risk because a potential buyer of your business is going to be concerned with your non-compliance. Some potential buyers will not consider buying your accounts, at least until you end up giving the notice.
    Another potential problem you may have is that a regulatory agency [licensing board, attorney general or consumer affairs] will take the position that your willful and pervasive pattern of non-compliance constitutes deceptive trade practices. The penalty could be a fine or a directive to notify all of your affected residential subscribers and offer to give them their money back and restore their premises. 
    I know that it's hard to make adjustments in your practices after 18 years, but as the years continue to go by you are going to have to consider an exist strategy. Your practice significantly reduces the value of your accounts, and that alone should be sufficient motivation to get with the program. Getting the Standard Form Agreements, which have the 3 day notice and also comes with the actual cancellation notice you are required to give to the subscriber is a good start for you [and everyone else].  if you have updated contracts then you should be executing them properly and following all the requirements that the contract lays out, especially as it pertains to the cooling off period.
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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
516 747 6700
www.KirschenbaumEsq.com