ADT is currently the largest home security provider in the United States, serving over 8.3 million customers, and holding more than 35% of the security services business. ADT is also the subject of many consumer complaints, and has a less-than-flattering Facebook Wall. Common complaints include false advertising, misrepresentation of contract length, and bait-and-switch tactics. Since so much has been written about it, I thought ADT’s residential terms and conditions could use some exploring.
**UPDATE: It turns out that there are two sets of ADT terms and conditions. The first is the public/promotional set linked to above. The second is the much more difficult to find ADT Residential Services Contract. The latter seems to be available only to customers who sign up with the service, and not anywhere on ADT’s website—meaning you don’t get to look at the contract until after you have signed up to install the system. The copy I found was signed in Minnesota in 2009, so it may have changed since then or be different depending on the state in which you live. I have separated the analyses of the two sets of terms and conditions below.
ADT Residential Terms and Conditions
1. Terms and Conditions Clutter. Before even getting to the substance of ADT’s terms and conditions, I should note that it’s problematic just to determine what terms and conditions apply. ADT includes the fine print for any of its current promotions, and buries ADT’s general terms and conditions of its residential services (PDF) in the middle of them. Check out the previous link to see the terms that are applicable to all residential services provided by ADT, and be aware that the provisions in this agreement are all mashed together in arbitrary paragraphs, making interpretation of the individual statements difficult (see the ownership section below for an example).
2. Ownership of Security System?. Any system that costs less than $600 to install will remain the property of ADT, without qualification. The document immediately follows this statement with a statement about homeowner’s insurance, and another statement about a one-time communications connection fee, but does not state whether they are connected to the $600 amount in the system ownership statement. Due to this ambiguity of contract construction, ADT is risking having the court interpret the contract for them.
3. Extended Warranty Requirements. Purchasing ADT’s extended limited home warranty (called p-QSP) requires a 36-month commitment for $39.99/month (including P-QSP payment), except in Las Vegas, NV ($44.99 per month) and California (24-month requirement).
4. Theft Protection Guarantee. Oof. For a maximum potential benefit of $500 toward a homeowner’s insurance policy deductible, a customer needs to fulfill seven requirements to ADT’s “reasonable satisfaction”—whatever that means. Among these requirements are: an intruder entered through a door, window, or other area equipped withADT , and the system was not “bypassed”; a written claim is filed with the homeowner’s insurance company, which is not contested; the burglary is reported to the police and the customer obtains a written police report; the customer signs and files with ADT the “original certificate”; and, that the burglary took place while the security system was on, was working, was connected to ADT’s central station, and that all the doors and windows were locked. So even if ADT’s product fails or is not connecting properly, it does not need to honor this guarantee…of $500.
ADT Residential Services Contract
5. Cancellation and Cancellation Fees. After the initial term of the service has ended, ADT’s security service automatically renews every 30 days until the customer provides written notice of termination, which needs to be made at least 30 days prior to the cancellation date. If you terminate the service prior to the end of the initial term, you will be charged an early termination fee of 75% of the charges remaining in the contract’s initial term. That’s an enormous charge for a service that is no longer being provided. I don’t know if that’s even enforceable, but you should always assume that if you sign the contract, you will be held to it.
6. Additional Charges. There are all sorts of potential additional charges ADT can impose under the contract, including, most notably, increases in cost of ADT’s facilities, which they can kindly pass along to you even though there is no benefit to you.
7. Liability Cap. ADT claims that it “will be extremely difficult to determine the actual damages” resulting from a failure to perform their services. So if ADT is found to be responsible for damage to you, you have agreed to limit their responsibility to the greater of (a) $500, or (b) 10% of the yearly service charge you pay. This even applies if the damages are due to ADT’s “negligence, gross negligence, failure to perform duties under [the] contract, strict liability, failure to comply with any applicable law, or other fault.” That’s absurd, and I would argue it is unconscionable.
8. Customer-Owned System. If you already own your own security system hardware and simply want to connect it to ADT’s monitoring service, or you want to integrate it into a larger ADT security system, there are a slew of conditions and qualifications (laid out in paragraph 12 of the Contract).
9. Warranty Exclusions. Ready for this? Damage to your ADT security system resulting from THEFT is excluded from the warranties. Also excluded are: (a) ordinary maintenance or wear and tear; and (b) alterations to the system made necessary by damage to your premises or the alarm system (presumably this includes burglaries).
In all, this is an incredibly one-sided contract, and is not at all reassuring, either in terms of ADT’s reliability for providing their service, or for providing reasonable remedies if their product or service fails. After reading the contract and the terms of service,
if I were going to install a security system, I would choose a different provider of services.
Have you had experiences or problems with ADT’s products or services? How did they turn out? Let us know in the comments, and keep those ideas for future Fine Print Fridays coming. I’m always looking for interesting contracts to examine.