ADT Sued for Unfair Termination Fees and Monitoring Rate Hikes
The way security customers look at alarm contracts is shifting. A number of traditional and new alarm companies have started campaigns offering security services without contracts.
Customers seem less and less inclined to be tied down by the industry norm, if the recent class action lawsuit against ADT is an indication.
Earlier this month, an unfair business practices class action lawsuit was filed in the United States District Court for the Central District of California against ADT Security Services on behalf of all consumers who purchased ADT home monitoring services, a press release stated.
The proposed class includes any current or past customer of ADT who was or could be charged an early termination fee. But the lawsuit also takes issue with rate increases for customers under contract and includes customers whose rates increased or could be increased without prior notice.
Lessing Gold, partner at Mitchell Silberberg & Knupp LLP and SDM's contributing legal writer noted that early termination are legal in California as companies are entitled to compoensate for the "loss in profit" that stems from an early cancellation. Though, he added that there may be special factors involved in this claim.
The press release calls early termination fees “unlawful penalties” that provide an “anti-competitive” advantage to ADT.
According to the lawsuit, ADT’s imposition of early termination fees is unjustified when it is the company which failed to provide services (that presumably resulted in a cancellation). Or, in circumstances where ADT monitors a system that was previously installed and the company did not incur any installation or equipment costs. In addition, it claims that these fees go against consumer protection statutes in California, Illinois and others in the United States.
Finally, the lawsuit also seeks compensation for “ADT’s pattern of unilaterally increasing alarm monitoring fees while consumers are under contract for lesser fees.” It alleges that ADT increased customer fees without providing proper notice in advance, or acquiring informed customer consent.
Plaintiffs are represented by L. Timothy Fisher of Bursor & Fisher, P.A. and the Law Office of Jana Eisinger PLLC.