ADT's home security contracts: A protection racket?

That "free" ADT home security system could end up costing you a lot of money if you want to escape from your contract.
Written by Jason Perlow, Senior Technology Editor on

In July of 2012, I sold my home in New Jersey and moved to South Florida. At the time, for the new house, I was looking for a comprehensive home automation solution that included broadband, subscriber premium television as well as home security/lighting & thermostatic control/fire & carbon monoxide detection.

I ended up going with AT&T U-Verse as my broadband and television provider. I really wanted to get AT&T Digital Life, which would have allowed me to do all of the above from a single application, but the company was about six months away from deploying it in my community.

Rather than go without a security system, I signed up (through an AT&T referral link during U-Verse provisioning, which almost certainly netted them revenue) for ADT.

I also ended up buying a NEST for home thermostatic control because ADT didn't have an equivalent product at the time.

For the ADT setup, I paid a $77.00 installation fee and I have a recurring bill for central station monitoring that is $52.99 a month. I thought it was a relatively good deal at the time, and the security monitoring and mobile app, ADT Pulse, has served its purpose.

But I've always wanted something much more integrated that did more. Google's acquisition of NEST this week for $3.2 billion has yet again piqued my interest in AT&T Digital Life, which is now avaliable in my area. ADT now has a comparable system, but I would prefer to deal with one vendor.

I had the AT&T sales technician over this morning to see what it would take to replace the NEST, the ADT system and add some additional functionality, which includes smartplugs for interior and exterior lighting automation control.

The equipment setup cost would be $450, and the monthly bill about $50.00. That would include a single smartphone/tablet app as well as a web portal that I could use to control everything in my house. 

I was ready to sign on the dotted line and schedule an installation appointment, but I realized that there was still some time on ADT's central station monitoring contract.

I thought it was about six months, thinking it was a two-year contract, but after calling in and expressing my desire to terminate, I was told it was a three year contract (which is standard for ADT) and that the termination fees would be approximately $596.00 because the system was free and it would be equivalent to 75 percent of the remaining contract monthly fees ($795.00).

[1/16/2014 Editor's note: the above paragraph has been corrected to reflect's ADT's pro-rated contract termination policy. A previous version of the text indicated it was not pro-rated, but based on equipment cost.]

First, I think this is ridiculous on a number of grounds. ADT's equipment lay out is a cost of doing business, and their contract termination fees should not be excessive.

Second, they can re-use and recondition any equipment that gets de-provisioned from a household, and there isn't significant wear and tear on the central station device, wireless door sensors and smoke detection unit, like you might have with an expensive smartphone on a wireless services contract.

I asked the AT&T DigitalLife sales technican if they would be willing to absorb the termination fee in order to gain my business. He called into his manager, and they weren't able to authorize it.

AT&T is asking for $450 in equipment costs, now they also want me to eat $600 in termination fees from their former partner, now turned competitor as well? Doesn't seem right, and doesn't seem like an effective strategy for winning over new households.

I think AT&T should take responsibility for this because they referred me to ADT in the first place, they made revenue on the relationship during the signup process and they must realize that there are many other people in my community that are in the same boat. At the very least, subsidize the hardware so it's not a total loss.

So now I'm stuck with an ADT security system I no longer want, and I have to wait another year and a half to pull the thing out.

ADT is currently facing a federal class action lawsuit in the state of California for excessive and anti-competitive termination fees. I wouldn't characterize these simply as high termination fees, however. I'd call this a protection racket.

Have you tried to escape your ADT contract, only to face excessive termination fees? Talk Back and Let Me Know.


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