Security Company To Pay $10,000 In Refunds To New Yorkers
Attorney General Spitzer today announced a settlement with a residential security business that will permit thousands of customers in the Hudson Valley and Western New York to cancel contracts that had been automatically renewed.
ABC Alarm Company and its predecessor, Crime Busters Incorporated, were accused of violations of state consumer protection laws that prohibit the use of automatic renewal clauses in consumer contracts unless proper notification and cancellation procedures are provided.
"Consumer protection laws prohibiting automatic renewal clauses in contracts were enacted to guard consumers against unknowingly binding themselves to indeterminate terms," Spitzer said. "Today's settlement will allow thousands of New Yorkers who were forced to continue paying for security services to get their money back and terminate their security service contracts."
In 1996, the Connecticut-based security firm signed up approximately 2,000 New Yorkers in the Hudson Valley and Buffalo area to four-year contracts with First Federal Security Systems, Inc. The contract's fine print contained a clause automatically renewing services for an additional four years unless the customer notified the company within 60 days of the contract's expiration.
Last year, instead of properly alerting its customers to the automatic renewal provision, ABC Alarm continued to bill them and even advised those who tried to cancel that they could not do so.
In settling the case, ABC Alarm agreed to allow any New York customer to cancel any contract that had been automatically renewed without obligation or financial liability. The company is required to send notification letters explaining this right and giving customers until April 30, 2001 to act. ABC Alarm will pay $10,000 to Spitzer's office to cover refunds to customers forced to pay for security services despite attempts to cancel contracts that were improperly automatically renewed.
The firm also agreed to affirmatively notify all future customers of automatic renewal clauses. Within 75 - 90 days of the contract's expiration, ABC Alarm will now send certified letters to customers notifying them of their right to cancel and of the procedure to do so.
ABC Alarm also agreed to pay $15,000 in civil penalties.
This case was handled by Assistant Attorney General G. Nicholas Garin of the Poughkeepsie Regional Office under the supervision of Assistant Attorney General In Charge Mary Kavaney.
Individuals with questions about the settlement with ABC Alarm or about their rights and responsibilities regarding automatic renewal clauses are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.