The Contra Costa County District Attorney's Office has sued a national alarm company, saying certain rate hikes and contract termination fees violate California law.
The lawsuit filed Monday seeks to force ADT Security Services to change its contract provisions and also asks for restitution to ADT customers throughout California who have been subjected to such costs in initial contracts.
ADT, based in Boca Raton, Fla., denies any wrongdoing.
ADT requires customers to enter into two- or three-year contracts in which the company reserves the right to raise monthly fees after the first year. The lawsuit alleges that by failing to advise customers how much the rate increase will be, ADT is in violation of contract disclosure requirements in California's Unruh Act.
The district attorney's office alleges ADT is also in violation of the federal Truth in Lending Act, though its lawsuit is limited to addressing any violations under state law.
"We simply want them to put the total amount of a contract obligation on the face of the contract," said Lon Wixson, Contra Costra County deputy district attorney. "We think they can't raise the rates during a contract term unless they tell customers how much it's going to be up front."
The lawsuit further alleges that termination fees for customers who discontinue ADT service can exceed the remaining balance of a contract obligation, even though ADT no longer has to provide service. The provision violates state civil code, Wixson said.
ADT contracts allow customers to either accept the rate increase or decline it and cancel the remainder without a termination fee, ADT said in a news release. The company said its contracts are in compliance with state and federal laws.
Wixson, who works a special operations division dealing with consumer fraud, said the district attorney's office was in discussions with the alarm company to try to change its contract provisions for more than two years before filing the lawsuit.
ADT offers a variety of home, commercial and government alarm services, with nearly 6 million customers in North America, according to the company's Web site. The company could not say Tuesday how many of those customers are in California.