Recently, there has been much discussion on the topic of automatic renewal for alarm monitoring services. Many experts believe the process of automatic renewal for monitoring services is a valuable asset. However, while clearly an alarm system is a very useful instrument in deterring crime, I would argue that the automatic renewal clause solely benefits the monitoring service provider.
Industry lenders extend credit, in part, using the assumption that the subscriber will continue to pay for service at the base rate or higher, for a period extending beyond the initial contract term. Attrition projections assume that most customers will do nothing at the end of the initial contract term and therefore renew by default.
The typical situation used to promote the automatic renewal of alarm monitoring services describes a subscriber's failure to call the alarm company on Monday to renew their service, being cut off on Tuesday and being burglarized on Wednesday. However, this is not an example of real world, alarm company, accounts receivable dynamics.
In fact, where there is no automatic renewal clause in place, no contract at all, or even an extended failure to pay by the subscriber, general industry practice is to carry the customer for several months, while escalating the collection process. Very few, if indeed any, central stations will knowingly fail to respond to an alarm signal, without several notification attempts by mail, telephone and finally certified mail with return receipt.
We as an industry should, in my opinion, consider crediting our customers with a modicum of intelligence and the ability to choose. The fact is that after a subscriber's initial contract term has been met, the subscriber is free to choose another monitoring service provider or indeed no provider at all.
In general, satisfied customers will continue to pay for their alarm service, whether or not an automatic renewal clause exists in their contract. Unhappy customers will not only fail to renew but in many cases attempt to leave before completing the term of the contract.
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