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Automatic renewal of alarm contracts – why month to month is recommended  
May 8, 2021
Automatic renewal of alarm contracts – why month to month is recommended
          North Carolina is trying to pass [passed a third reading on April 28, 2021, whatever that means] a consumer protection law that will require certain notice to consumers before a contract can renew automatically.  Alarm companies are not going to provide the notice; it’s too cumbersome.  The requirements are below.  Don’t lie to me, and don’t lie to yourself; you are not going to comply with the requirements.  That’s the case in most jurisdictions that have laws affecting automatic renewal provisions in consumer contracts and sometimes commercial contracts too.  Check your state automatic renewal laws on the K&K website at Alarm Law Issues / Automatic Renewal – State by State 
          How do I know you’re not going to comply with these rules?  Because my experience is that no alarm company complies; none [don’t bother writing me that you do – I know you don’t]. 
          You cannot do any alarm work without a written contract in place; that would be an enforceable written contract.  While it’s possible, maybe even probable, that a subscriber would be held to the terms of the contract during renewal, do you really want to risk the “farm” on it?  Are you really willing to risk a claim for a subscriber loss during a renewal period and have the subscriber claim that your services were being provided without any written contract? 
          If you don’t like that argument, try this one.  Most potential buyers of your alarm contracts will want to exclude expired contracts in automatic renewal unless you can prove you gave required notice of renewal [which you won’t be able to do – because you won’t be giving the notice]. 
          But all is not lost.  This proposed law in North Carolina, no matter how poorly conceived and written, does have what every automatic renewal law I am aware of has, an exclusion for month to month renewal.  That of course makes perfect sense because if the purpose of the law is to permit the customer to cancel the contract rather than face long term automatic renewal the purpose is accomplished by month to month renewal.
          The North Carolina proposed law is dumber than most.  Not only is notice of renewal required but before you can charge the consumer you have to actually get consent to the renewal.  You may as well get a new contract signed if you’re going to all the trouble of complying with the proposed law.
          Though automatic renewal laws may be well intended legislatures should note that far worse consequences could arise if alarm services abruptly came to an end at the end of a contract term.  Just imagine if fire alarm monitoring, Pers or even intrusion monitoring ended on a date and time certain, without notice.  Sure, laws could require an alarm company to send a notice of impending termination, but what if the customer doesn’t get it, can’t read it or can’t read at all.  Then we will have the judges trying to figure out if the notice “your alarm monitoring ends on April 30, 2021 at 5 PM” means what it says and provides sufficient notice.  [yes, that’s a sad joke]. 
          What about states with no automatic renewal law?  Why not have an automatic renewal for 1, 3 or 5 years or like term?  A few reasons:
  *  a law may eventually be enacted and you won’t be able to rely on your automatic renewal provision; you’ll need to get a new contract or comply with the law
  *  The Standard Form Agreements, including the Residential All in One [which is the one most impacted by automatic renewal laws] is long enough; 5 years.  After 5 years it’s time to get a new contract; it’s time to visit the customer and update the system, sell something new, increase the RMR.  What if you don’t use the Residential All in One?  Well then you must be a lot smarter than me when it comes to alarm contract law and I guess you have it all figured out.
  *  alarm contracts are not more valuable if they renew month to month or for some longer term [no matter if it’s 1, 3 or 5 year renewal – same value as a month to month renewal]
          Here is the proposed North Carolina automatic renewal law being considered by the law makers in NC;  Let them knock themselves out.
                   The First requirement is:
          Provide a disclosure statement that clearly and conspicuously provides notice of all of the following:
a. That the contract will be automatically renewed if the consumer agrees 15 to the contract.
b. The length of the initial term of the contract and the length of each renewal period under the contract.
c. The amount to be charged to the consumer for the initial term of the contract and the amount to be charged to the consumer for any renewal periods, if known.
d. If any terms of the contract will change upon contract renewal, a list and explanation of those terms.
e. An electronic mail address, mailing address, toll-free telephone number, or another cost-effective, timely, and easy-to-use mechanism that the consumer may use to terminate the automatic renewal.
          Second requirement:
 Obtain the consumer's affirmative consent before charging the consumer for an automatic renewal.
          Third requirement:
For any automatic renewal of six months or more, provide written notice to the consumer by personal delivery, electronic mail, or first-class mail, or any other form of notice agreed to by the consumer, at least 15 days but no earlier than 60 days before the date the contract is to be automatically renewed, stating the date on which the contract is scheduled to automatically renew and notifying the consumer that the contract will automatically renew unless it is cancelled by the consumer prior to that date.

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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