Nation’s Largest Security Firm Settles Nys Investigation

Attorney General Spitzer today announced an agreement with the nation’s largest home security company that will result in nearly $650,000 in refunds to more than 1,000 consumers in New York.

The agreement with ADT Security Services, Inc. will also result in the replacement of nearly 800 radio transmitters in home security systems.

"Consumers invest an extraordinary amount of trust in home security firms and it is imperative that such firms adhere to the highest professional standards," Spitzer said. "This agreement will help ensure that home security technology is as effective and dependable as possible, and that security companies abide scrupulously by all consumer protection laws."

Spitzer’s office began investigating ADT after a customer complained about possible problems with a radio transmitter in a home security system. The transmitter - which had been installed by Alarmguard Holdings, Inc., a security company ADT acquired in 1999 - was supposed to deliver a radio alarm signal to a central monitoring station. However, it was determined that in some cases the device failed and that alarm signals may not have been communicated.

The Attorney General’s investigation revealed that over 1,300 ADT customers had security systems that used similar radio transmitters. Information developed during the investigation indicated that many of the faulty devices were installed in Westchester County.

In most cases, these transmitters were intended as back-up alarms in case the homeowner’s phone line was disabled. It is not believed that the defective device jeopardized anyone’s home security, although it had the potential to do so if the telephone connection was severed. After the investigation began, ADT replaced all of the radio transmitters at a cost of over $500,000.

In addition, ADT has agreed to refund a separate $18 monthly fee paid by consumers for the transmitters. This will result in direct refunds of approximately $600,000 to current customers of ADT. Former ADT customers who had a radio transmitter of this type can receive a full refund if they file a complaint with the Attorney General’s office within the next 60 days.

Spitzer’s office also discovered that ADT had been automatically renewing its contracts with consumers after the initial three-year term expired, in violation of state consumer protection laws. State law requires notification and the opportunity to cancel prior to enforcement of an automatic renewal provision. As part of the settlement, ADT will change the contract it uses on a nationwide basis to allow consumers to cancel upon 30 days notice. ADT also will refund nearly $50,000 in cancellation fees it charged consumers when they canceled their renewal contracts.

Finally, ADT, which fully cooperated with the investigation, will pay $100,000 to the state to cover the costs of the investigation.

ADT, based in Boca Raton, Fla., is the largest single provider of electronic security services and has nearly four million commercial, federal and residential customers throughout North America and Europe. The company employs approximately 1,000 individuals at a Customer Care Center in Henrietta, New York.

Individuals interested in receiving a refund from ADT are encouraged to call the Attorney Generals consumer help line at (800) 771-7755 or go to the office’s web site at www.ag.ny.gov.

This case was handled by Assistant Attorney General Shirley Stark of the Consumer Frauds and Protection Bureau.


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