Long Term Contracts
When shopping for an alarm system, you will quickly discover that the vast majority of companies require you to sign a long term contract for from one to five years for monitoring services. This is done for several reasons (none of which are of any benefit to the consumer). Monitored accounts under a long term contract increase the equity in the business, since they can be sold to another company for a significant percentage of their full face value. If the account is only on a month to month basis, the contract re-sale value is minimal, since the purchaser knows the end user is free to move or not as he wishes.
As a consumer, you should NEVER sign anything more than a month to month contract unless you fully appreciate what you are getting into, and then only under certain conditions ! If you have purchased one of the mass market “free” systems requiring little or nothing down at the front end, or you are leasing the system, a contract is legitimate and is to be expected. Here the dealer must protect a sizeable investment in equipment costs and labour. However, if you own your equipment outright, there is no advantage to you whatsoever in committing long term to any particular alarm company. Should you experience poor service from your dealer, or should your dealer go out of business, a month to month contract will allow you the flexibility to quickly change dealers to another who will give you proper service. Should the original dealer sell his accounts, you are not forced to follow the contract and deal with the new “owner” (which is usually one of the larger conglomerates who’s service often leaves much to be desired). Service on a month to month basis is the ideal situation for the end user customer, and the ONLY one you should accept under certain conditions.
Be especially careful to watch out for contracts with embedded auto-renewal clauses that automatically renew your contract at the end of the initial term for another like term unless you remember to give them written notice you no longer wish to renew some months in advance of the end of that same initial term. It is far too easy to become trapped this way, since very few people actually remember when their contract term is up. It is far more advisable to ensure that your contract term simply goes “month to month” after the initial term is up ! Or ensure in the contract terms itself that the alarm company must give you written notice of the renewal well in time for you to take action should you not wish to renew (Note: In some places, consumer protection laws require this notice be given the end user, but not all).
Many people are under the mistaken impression that they MUST continue to deal with the installing company and have no choice in the provision of monitoring. Such is not the case. IF you are not locked into a long term contract, you are free at anytime to shop for superior service or monitoring rates. When you bring your alarm to another company for monitoring / warranty services, this is like “Christmas come early” for that dealer ! He gets the revenue stream without the need to install the equipment. This is called a “takeover” in the industry, and is something that all quality dealers experience as “spillover” from unhappy customers leaving the large alarm company conglomerates for the more personal service of a smaller dealer.
One of the largest alarm companies in the business insists that a long term commitment contract protects you the consumer against price rise. Such is not the case, since their contract has an option in the small print allowing them to increase their monitoring rate at any time, leaving you almost no options except to remove the system and start again – something they know most consumers won’t do over a dollar or so a month price increase ! This business is simply too competitive to allow dealers to arbitrarily increase prices as they wish (except perhaps if you are locked in to a long term contract with them….).
If you own your equipment outright, shop around for a dealer who does not require a long term commitment on your part. The more consumers demand an end to this industry self serving and unnecessary business restriction, the more quickly it will disappear from the marketplace !!