ADT strikes deal with N.Y. AG
BOCA RATON, Fla.-ADT Security Services has agreed to pay nearly $650,000 in customer refunds and change its new residential security services contract in a settlement reached between the security company and New York Attorney General Eliot Spitzer, a settlement that all together will cost the company $1.29 million.
Spitzer's office launched an investigation into ADT's installed back-up wireless radio transmitters after receiving a complaint in July of 2001, said Christine Pritchard, a spokeswoman for Spitzer's office. ADT agreed to replace the 1,300 transmitters installed by Alarmguard, a company ADT acquired in 1999.
All existing transmitters were installed prior to the acquisition, according to Ann Lindstrom, spokeswoman for ADT, but she said the company is looking at other radio transmitters manufactured by Seaboard, Procom and AES that may have been installed in customer homes by companies that ADT has subsequently acquired.
The replacement of the transmitters in New York, located mostly in homes in Westchester County, will actually only affect about 800 transmitters, since many of the accounts have been cancelled or are no longer in service, Pritchard said. The replacement will cost more than $500,000, with an additional $600,000 in refunds to customers who paid an additional $18 monthly fee for the radio transmitters.
"We began replacing the potentially faulty Alarmguard systems as soon as we learned of the problem last year,"Ã‚Â said Arthur Stromstedt, vice president of ADT. "Of the customers affected, most of the alarm systems that have experienced some reliability problems have already been replaced."
In order to comply with New York state law, ADT also agreed to remove the automatic renewal clause in its residential service contract. In its original form, which automatically renews the three-year contract unless a customer cancels within 30 days, the contract violated New York's law that requires advance notice and an opportunity to cancel. ADT will pay about $50,000 in refunded cancellation fees.
The contract will now renew on a month to month basis if the customer does not call to cancel within 30 days of the expiration of the initial contract. Lindstrom said the intent of both the new and original versions of the contract was to ensure that customers did not find themselves without alarm service because they had forgotten to renew.
ADT also agreed to pay the attorney general's office $100,000 to cover the costs of the investigation.