The ACCC has accepted a court-enforceable undertaking from home security provider Tyco Australia Group Pty Ltd, trading as ADT Security, to refund consumers who were wrongly invoiced, and to remove or amend certain unfair contract terms from its residential customer service agreement.
ADT Security has admitted that it is likely to have made false or misleading representations by continuing to invoice residential customers who had terminated their contract for home security services.
Under the agreement, customers were entitled to terminate their contract at the conclusion of the agreements initial term (usually three years) by giving 30 days’ written notice.
ADT Security would not act on this written termination notice until they had spoken to the customer. If they were unable to contact the customer, the company disregarded the notice, treated the agreement as on-going, and continued to supply the service and bill the customer.
“By continuing to invoice customers who had terminated their contract in accordance with their agreement, ADT Security is likely to have made false or misleading representations that ADT had a right to payment for services, when in fact ADT had no such right, in breach of the Australian Consumer Law,” ACCC Commissioner Sarah Court said.
“ADT Security has undertaken to put in place internal processes to commence the 30 day termination notice period as soon as it receives written notice of termination from its customers.”
Customers who in the past two years gave notice in writing to terminate their agreements and whose agreements were not terminated by ADT Security will be contacted by the company to arrange a refund.
The ACCC also had concerns about a number of potentially unfair contract terms contained in the residential customer service agreements.
ADT Security admitted that a clause in the contract which allowed it to vary the agreement during the initial term with one months’ notice was an unfair contract term, and was therefore void. ADT Security has undertaken to remove this term from the agreement.
The company also admitted that a clause permitting it to increase fees 12 months into the standard three year term is also likely to be unfair. ADT Security has undertaken to amend this term.
“We are pleased that ADT Security has also agreed to amend its residential service agreement to address our concerns that some contract terms were unfair,” Ms Court said.
“The contract terms that we were particularly concerned about required customers to either accept a fee increase or other amendment within the initial term, or pay an exit fee for terminating early.”
As well as removing and amending certain contract terms, ADT Security has also undertaken to amend its processes to ensure customers are given information about exit fees and decommissioning costs before entering into agreements.
A copy of the undertaking can be found at: Tyco Australia Group Pty Limited
Notes to editors
Under the Australian Consumer Law there is no prohibition on businesses including or relying on unfair contract terms. Although courts can declare terms to be unfair, with the result that they are void and unenforceable, penalties cannot be imposed on companies using these unfair terms.
ADT Security is a division of Tyco Australia Group Pty Ltd (Tyco) and provides security services to private and commercial clients, including the installation and monitoring of security cameras, home security alarms and smoke alarms.
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