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ADT Home Monitoring Services

ADT sued over early termination fees

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Wednesday, March 6, 2013

Early termination fees are pretty much standard in the security industry but now The ADT Corp. is facing a lawsuit over them, I’ve learned.

Earlier this week two law firms announced the filing of a class action lawsuit in federal court in California on behalf of ADT Home Monitoring Services customers regarding early termination fees, also termed early cancellation fees.

The law offices of Bursor & Fisher and of Jana Eisinger contend in a news release that the fees are illegal and the “lynchpin of ADT's ‘never let them go’ strategy.”

The attorneys are urging consumers who believe they were wronged to contact them.

Here’s more from the March 4 release:
 

The proposed class consists of two groups of consumers: (1) all current or former consumer subscribers of ADT who have been charged an early termination fee or are subject to being charged an early termination fee (also called an Early Termination Fee or Early Cancellation Fee, collectively "ETF", and comprising the "ETF class"); and (2) all current or former consumer subscribers of ADT whose rates were increased or are subject to increase by ADT without prior notice while in the initial contract period or during subsequent contractual extensions.

This class action is intended to redress ADT's wrongful practice of imposing early termination fees, the lynchpin of ADT's "never let them go" strategy. Early termination fees are unlawful penalties used simply as an anti-competitive device and do not compensate ADT for any true costs of breach. These penalties, which are unilaterally imposed by ADT - even when ADT fails to perform the services promised - also violate the consumer protection statutes of California and Illinois and similar laws nationwide.

The early termination penalty is extracted under circumstances which cannot be justified, when ADT has failed to perform the very services that form the basis of ADT's obligation. The penalty is also extracted from customers who contracted with ADT to simply monitor a system that was previously installed, requiring no equipment to be installed and resulting in a windfall to ADT upon termination. By charging the early termination fee ADT gets paid for years of monitoring without doing any monitoring to earn those fees.

In addition, Plaintiffs seek redress for ADT's pattern of unilaterally increasing alarm monitoring fees while consumers are under contract for lesser fees. These increases are implemented without adequate prior notice and without providing the appropriate and required disclosures necessary to ensure that customers consent to these increases in advance. ADT relies on small boilerplate text neither signed nor highlighted for customers to claim its "right" to unilaterally increase fees.

I contacted ADT and Sarah Cohn, ADT director of media relations, who responded that the company has a policy of not commenting on pending litigation. She noted however, that “termination fees are common in the industry when a company absorbs the upfront cost of the installation.”

I’ve also reached out to the lawyers involved to find out why they’re targeting ADT. Stay posted!