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LegalGems
LegalGems, Lawyer
Category: Consumer Protection Law
Satisfied Customers: 3201
Experience:  Research Attorney; Private Practice; Attorney Mentor; Mediator
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Hello there - I hope you can help me. Having signed an

Resolved Question:

Hello there - I hope you can help me.

Having signed an alarm monitoring contract last year with a security company I later learned they had withdrawn funds from our account without my approval. They claim a direct debit was agreed to per the contract BUT I expressly requested a monthly invoice and after reviewing my contract I can confirm that NO debit agreement exists. (My bank has since put a block on them). In trying to solve this issue my dealings with the company's customer service gave me cause for concern. Despite the sales materials proclaiming their 'award winning customer service' - in practice they were anything but.

Following some diligent research I discovered the mentioned alleged 'awards' are either self created by the company or do not exist at all. They also claim to have a Best of Angies List rating and even have the stamp on their website. So I contacted Angies list who confirmed my worst suspicions. This company has no such award and in fact has a negative rating with Angies list.

So, I contacted the BBB of California and the Bureau of Security and Investigative Services for California. The latter has studied my contract and finds the company in violation on several counts. They determine that my contract has in fact not been properly completed by the Security company representative (or tech) and that the security company is in breach of standards expected of licensed alarm companies. The BSIS mentioned they also have complaints on file from several other customers regarding this company. The Bureau is about to issue the security company a fine ( the second in three years) for breach of license. That being said however the Bureau is limited in its powers and is not a court. Building a case against a company takes considerable time and actually fully revoking their license is very difficult.

Meanwhile The Security Company have attempted to dodge the bureau at every step. Their most recent response has been they will send my contract to a collections agency and persist. so...MY QUESTION; Should I go to small claims court and file suit against this company and demand termination of contract

OR do the findings of the BSIS - that this is not a lawful contract- mean I am safe and do not need to take further legal action.

In words- is the onus on the Security Company to prove the validity of their claim to our having a contract ?
Or do I have to strike first and get the contract terminated in a court of law.
Which court - small claims ? (the value of the contract is roughly 3600)

Ideally,of course, I'd prefer to not go through the hassle of court. But as you can imagine I'm stressed, anxious and in fear for my safety as to what these dangerous deceivers might do next.
Thank You for your help
Submitted: 10 months ago.
Category: Consumer Protection Law
Expert:  LegalGems replied 10 months ago.

LegalGems :

Hi! LegalGems here. I have extensive consumer law experience and will use this to assist you with your issue today. How can I help you? I am sorry to hear of this. It sounds like you have been quite diligent in pursuing this. One moment please as I review the remainder of your question.

LegalGems :

I would not rely on the Bureau, as there main role is issuing fines; so unless they are able to shut down (revoke the license) the company, they really will not offer much recourse. However, I am thinking a well worded demand letter, as there are a few statutes being violated here. Let me look into this.

Customer:

I should point out I stopped paying this company ages ago. I've sent them a letter terminating our relations.

LegalGems :

California has extra protections for senior citizens- are you by chance a senior?

Customer:

Alas - not yet

LegalGems :

The concern would be this popping out in the future in a collections case - for the full value of the contract.

Customer:

Yes. Although for 3600 - are they really gonna hire a collections company when their own contract doesnt hold up.

LegalGems :

Very possibly - because you would be surprised at how many creditors get default judgments on bogus debts.

Customer:

I'm aware that should a collections company come calling i can send them a letter asking them not to call again and i can send them my copy of the contract and the copy of the contract the security company saiys it has- which by the way are starkly different. fraud even. So should I go file suit first or wait and see...

Customer:

RE; you would be surprised at how many creditors get default judgments on bogus debts.

Customer:

Really ? you mean the court favors the collections people ?

LegalGems :

As for small claims, small claims does not have jurisdiction to void a contract - they only have jurisdiction to award monetary damages. So this would need to be brought in civil limited - which would be a hassle. I would wait and see, because again civil limited is rather expensive, and has many hoops to jump through - versus small claims. If they sue on the contract, they can go to small claims. In all likelihood, you would prevail, based on the contractual issues. However, I think a pre-emptive strike via a complaint letter, asking them to rescind the contract in writing, would be effective. I will explore this further in a moment so I can reply to your last question. The courts don't favor collections people, but many collection agencies will file suit, the alleged debtor does not show up (either because service was improper or because they were intimidated and weren't aware of their legal rights); the creditor gets a default judgment - and then the poor defendant has to deal with vacating the judgment (time consuming, stressful and expensive) - and this all assumes the defendant has the wherewithall to hire an attorney or self-represent.

LegalGems :

I would also be concerned about your credit rating - yes, you could send the bureaus a copy of the contract if the company does report negatively, the bureaus would investigate, and then remove it - but again, a preemptive letter may help.

LegalGems :

Just a moment please.

Customer:

These people have been fined by the Bureau before so you'd think they'd improve but no.

Customer:

The most they can be fined is 2500.

Customer:

When we say the bureaus - do we mean the credit bureaus? I've never dealt with them. Should I pre emptively make them aware of my status with this company?

LegalGems :

Here is a sample letter from the FTC. http://www.consumer.ftc.gov/articles/0296-sample-consumer-complaint-letter You can make it more detailed by included the information you have (Angie's List, the fines, etc), and attaching a copy of the statute that prohibits this type of conduct. Business and Profession Code 17500 http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=17001-18000&file=17500-17509 Then you can mention the common law causes of action: fraud in the inducement, deceit, misrepresentation. The damages for these are generally economic harm suffered by the plaintiff; if the fraud, etc is severe enough, the contract will be rescinded, in which case you may be entitled to past monies paid. To show that you are willing to work with them, you can say in lieu of pursuing a court action, you will be satisfied with a written statement that the contract is rescinded, and that they will not issue any negative reports to the credit bureaus.

LegalGems :

Yes, the credit bureaus. No, they won't respond unless there is something filed by the creditor. That is my concern on this- often times people will pay off (or settle for a negotiated amount) something in order to avoid a negative rating.

LegalGems :

And as for the fine- they probably did a cost/benefit analysis - more profitable to keep deceiving people, and pay the occasional fine. Not the most ethical of business practices...

Customer:

Thats crazy. So how best do should I abate my fear of this company? I'll file a complaint with the FTC. Since I can prove that my contract and their contract are fraudulently different should I open a case with the lapd?

LegalGems :

Generally the police stay out of this and tell you to handle it in civil court - you can call and inquire, but that unfortunately is my experience. Filing a complaint with the FTC will be helpful, but also sending the letter mentioned above to the company would be beneficial - because I would think the company would comply with this in order to avoid a lawsuit re: misrep etc (all the causes of actions mentioned above).

LegalGems :

I know the bank has already blocked them from debiting your account, but you may want to close that account and open a new one- I'm not sure how unethical these people are, and them having this information (your personal banking information) is not recommended.

LegalGems :

Also, generally in contract cases, the courts limit the award to economic damages (actual monetary damages suffered). However, in 2004, the California Supreme Court revisited the issue, and found that the tortious intentional misrepresentation lawsuit can result in punitive damages (damages above and beyond actual economic damages - to use the defendant as an example based on the intentional aspect of the issue). http://caselaw.findlaw.com/ca-supreme-court/1175967.html Robinson Helicopter Company v. Dana Corporation. You may want to reference that in the demand letter.


LegalGems :

It appears that you have gone offline. Please let me know if you have any further questions and I will respond as soon as I see it. Thank you!

Customer: Yes- please excuse the delay- had to pick up my kids.
Customer: So in review we're saying a letter to the company
Customer: A letter to the company stating ....what? Am I asking or telling them the situation with regard to our relations or do I wait a d see if they move ahead with their collections threat?
LegalGems :

Hi- no worries- I was late in responding to you for the same reason! If you click on that link above, here one moment I'll relink you here: http://www.consumer.ftc.gov/articles/0296-sample-consumer-complaint-letter That letter serves as a model for you to formulate your letter. In case you end up in court, you would have the letter as further evidence of the issue. You would summarize everything - i.e . their misrepresentations, perhaps a copy of the BBB rating, etc. Then state that since their conduct constitutes intentional misrepresentation, deceit and fraud, you are requesting that they release you from - in writing- from any further obligation under the contract, and to agree to not make a negative credit report. If you cite the case I gave you above, you can mention that this would be an ideal solution for both parties - you, so you don't have to continue to deal with this; them, so they don't have to defend a lawsuit that may possibly include punitive damages. You can do a wait and see, but this can rear its head 4 years down the road, as that is the statute of limitations for breach of contract. If you do the letter, and they agree, then you can put this behind you and not worry about it at all.

Customer: Hmm, thanks. If I were to make a character assessment of the people involved and their court history ( ADT successfully sued them a few years back ) they're no strangers to legal drama it appears- I imagine they'd respond by trying to hold me over the barrel with the threat of hurting my credit . In which case- . Lets say they ignore or disagree with my letter ...what then?
LegalGems :

Then you would need to follow through with a civil suit. However, generally if there is widespread fraud/misrepresentation, etc, the attorney general will get involved, as the purpose of the attorney general is to protect its citizens (versus an individual)- and if the widespread fraud is pervasive, they will either fine or shut down the business. Since the company seems indifferent to fines, they may pursue more aggressive legal action. Another option - since it is wide spread - is to see if any attorney would be interested in a class action. There's a website www.topclassactions.com where you can see if there are any pending issues. I'm surprised the company has continued to get away with this without any consequence. Another thing- if the letter is sent, it will help prove your case as far as the credit bureaus go; as it will show you had a grievance and attempted to resolve it, to no avail.

Customer: Thanks for this advice. I've been privately living in fear over the whole thing.
LegalGems :

I would not worry to that degree. However, because these people are unscrupulous, you should periodically check your credit report. It's free, and you are entitled to one per year, from each agency - so it's a good idea to stagger it every 4 months - that way in case they have your personal info you will catch any misdeeds immediately.

Customer: I'll put a letter together and see how we go. As I mentioned I sent them notice of our intention to persue legal action and our conclu
LegalGems :

Yes, but sometimes when you throw around legal terms (and a case name) they know you've talked to somebody, so it often (no guarantees!) gets better results. I've had private clients say they sent a demand letter to no avail (even a debt negotiation letter); then when I send one on my letterhead - the client is shocked at the quick response. It takes it up a level so to speak.

LegalGems :

Since you'll be able to reference the law, they'll know you've been taking to an attorney, so this should help.

Customer: conclusion of payments. I just want them to go away. I don't even want any money back. All this you understand and have perhaps encountered before?
Customer: Takes it up a level. Yes. Are you based in LA or California by chance?
LegalGems :

I'm from California but we aren't allowed to gain clientele from this site -it's against the terms and conditions of our contract with them. I can link you to the state bar's referral page.

Customer: No worries. Thanks for this. Hope I can reach out to you if I've further questions in the months ahead via rhos
Customer: this site.
LegalGems :

Yes; feel free to request me - just put "To Legal Gems" in front of the question and the other professionals will leave it for me. Hopefully this company will realize it will be easier to count this one as a loss! I hope you do file with the attorney general, because if enough people do they are more likely to investigate.

Customer: Thank you. Will keep you posted
LegalGems :

Great. Good luck on all this. Take care.

LegalGems, Lawyer
Satisfied Customers: 3201
Experience: Research Attorney; Private Practice; Attorney Mentor; Mediator
LegalGems and 2 other Consumer Protection Law Specialists are ready to help you
Customer: replied 10 months ago.
Oh lastly - what advantage do they gain exactly by reporting us to the credit bureaus? While I understand it can harm my credit rating it still doesnt assure them of getting any monies...right?
Expert:  LegalGems replied 10 months ago.
Good morning. There is no added benefit per se,other than the general deterrent it provides- many consumers will pay debt they disagree with because of their concern over credit ratings. The frustrating thing is that when a consumer makes a settlement payment (less than full amount), or pays off a debt after it was delinquent, many creditors will refuse to remove the negative credit report - it is totally within the creditor's discretion. That is why I suggest that the consumer get it in writing during negotiations - that way they aren't surprised if it is in fact reported. From a creditor's perspective, creditor's have it "calendared" so to speak, and any delinquencies are automatically reported on that date (generally twice a month) - unless there is a manual reversal.
Customer: replied 10 months ago.

Hi. We're now selling our home. We'll move address. There's nothing in this contract I can find that relates to changing address or ownership of the property.


 


The new buyer I assume will bring their own security firm on board and use our same equipment.


 


Thoughts appreciated - whenever you get a second

Expert:  LegalGems replied 10 months ago.
Hello. I hope you got a good price on your home. I know the market is supposed to be improving!

I would caution you to read the contract very carefully, as most contracts state that you will either have to get the new owner to agree to take over the contract, or that you will purchase their services at the new residence.

However, it is possible (and hopeful) that since the contract didn't conform to the typical standards in other areas, perhaps it is deficient in this regard too!

Customer: replied 10 months ago.

We haven't quite sold as yet


 


I'm considering hiring a handyman to reprogram the system and switch off the monitoring our end- if such a thing is possible.


 


Between that and the formal letter....


 


?

Expert:  LegalGems replied 10 months ago.
Since it is still under contract so to speak, I think it would be difficult to find a handyman to do so (intentional interference with business relationship). Also, I would expect that the contract has a prohibition against this.

Even if it didn't, I'm afraid it would be implied (ie the contract covers the very services that would be blocked by doing this). And this could result in a breach of contract suit against you. However, at that point the court would look to the terms of the contract, take into consideration evidence, etc; and it is possible that s/he could rule the contract was void due to the original misrepresentatin/fraud issues.
Customer: replied 10 months ago.

Exactly- the actual contract is incomplete - partially completed therefore...


 


you'd advise just sticking with the FTC letter etc.


 


Am I under obligation to reveal to potential new buyers of our property the legal issues surrounding this alarm monitoring contract?


 


Would they inherit the issue?


The document appears to only mention the relationship between subscriber and contractor - which I read as 'us and them. Not the address per se.'

Expert:  LegalGems replied 10 months ago.
No; they cannot be forced to inherit this. Often times they will voluntarily assume it if they are interested in a system because the equipment is already there and the company offers incentives. However, a third party cannot be obligated to assume a contract - a home sellermay put this as a requirement in the sale of the home but I don't think that would be worth it as some people would not want an alarm system and may see the requirement as a negative.

Customer: replied 10 months ago.

So - no need to mention the sorry business at all ? Well, thats some relief.


 


I just filed with the FTC. Next up the Attorney General of California.


 


Thanks for your help!

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