comment on hitting the credit car January 30, 2019

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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comment on hitting the credit car
January 30, 2019
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comment on hitting the credit card from January 18, 2019 article
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Ken
    comment on the credit card issue 
    It is important to also think about it from a liability perspective outside of just authorization (or lack thereof). When someone is not meeting their financial obligations to a company it is usually due to one of two reasons – 1. They can’t afford it and therefore keep putting off the bill or 2. They are unhappy with something and are refusing to pay as a result of their dissatisfaction. 
    On item 2, sometimes they tell us they are unhappy; other times, they act like my 7 year old giving me the silent treatment and just wait until you send them to collections. This is something that should always be at the back of your mind when determining how to move forward with any type of collection effort. Is there any indication that they are unhappy? What was the last correspondence with them like? The stipulations of your insurance policy make this an even more important evaluation because you could be looking at dealing with any retaliation by the customer uninsured. 
    While certainly, your General Liability & Professional Liability policies are there for you when a covered claim arises, these policies are not intended to pick up the ramifications of business decisions such as aggressive collection efforts (i.e. filing suit against someone to recoup unpaid fees). 
Best Regards,
Crystal Jacobs, RPLU
usrisk@securityamericarpg.com
(866) 315-3838
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Response
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    Trying to process a credit card payment once you know the customer is disputing the services is not going to be productive because the card will either be denied outright or the charge reversed later. Sure there are exceptions and the card may end up being good for the duration of the contract term.
    Pursuing collection matters is another matter. Your options include forgetting about the customer or pursuing collection. Customers who are on the fence about suing you will be counterclaiming once you start your action. The Standard Form Agreement prohibits counterclaims in an action commenced by you, and that provision may help. The contracts also have arbitration provisions which makes pursuing collections easier.
    If a counterclaim, or independent action or arbitration is commenced, you need to check to see if you have insurance coverage on your E&O policy. The rule of thumb is, is the subscriber alleging a loss, a loss caused by burglary, fire, any cause the alarm is intended to detect or the security system or fire system is designed to provide detection. If there is a loss, there should be coverage.
    If the claim against you is that you overcharged or didn't finish the job, there is no occurrence and you won't be covered by your E&O carrier.
Keep in mind that even bogus claims against you that trigger insurance coverage will be consider when your loss run is reviewed.
    K&K starts a lot of lawsuits and arbitrations for the alarm industry. Counterclaims or independent claims are rare. Unless you run the worst operation in the alarm industry [no, I wasn't thinking about you] you don't have to worry about counterclaims or counter measures if you pursue collection proceedings against your customers.
K&K's collection department can be reached by contacting Kathleen Lampert at 516 747 6700 x 319 or KLampert@kirschenbaumesq.com
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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