Beware of automatic contract renewals
How many times have you quickly signed a contact without carfully reading it. That's what one valley couple did, and it's coming back to haunt them.Photo: Video by ktnv.com
Las Vegas, NV (KTNV) -- How many times have you quickly signed a contact without carfully reading it. That's what one valley couple did, and it's coming back to haunt them. In a Contact 13 consumer alert, how skimming over the fine print could cost you.
"There's absolutely no customer service, there's no nothing," says Miguel Font.
He and his wife, Isora Gotay, are fed up. This Henderson couple was moving and called to cancel their home security service back in April. But they were shocked by the response from the company CastleRock Security.
"The first thing they said was you have to do that by mail, by letter. But you will not be able to do it because you still have 11 months to go on the contract," says Miguel.
He was confused because he thought their contract was up. They signed a 3 year term back in April of 2007, that was 5 years ago. So they actually had been using the service 2 years beyond the life of the original contract.
"That's when I found out the contract was automatically renewed every year," says Miguel.
You heard right, Miguel and Isora were stuck. The contract they signed back in '07 says the agreement "will automatically continue from year to year." And the only way to cancel is by written request at least 30 days before the end of the term.
"So they wouldn't help you at all?" asks Tricia. "Oh no. Actually one of the main complaints we have is the lack of customer service they showed. They didn't offer any alternatives," says Miguel.
In May, Miguel and Isora tried sending the company a cancelation letter, but with no response. 5 months later, the couple says CastleRock is still sending them a monthly bill for a house, where they no longer live. Miguel says he refuses to pay.
"Are you worried they'll send you to collections?" asks Tricia. "They probably will. They probably will," says Miguel.
If that happens, Miguel says he'll make the required payment. Contact 13 wanted to talk to CastleRock. They wouldn't comment on this specific case, but the security company says automatic contract renewals are an industry standard. We're told it's done for the safety of every customer. That way service is never unexpectedly cut off.
But Miguel disagrees.
"If you know the contract is going to expire, they have a computer there. Send me a note," says Miguel.
He says it's unreasonable to think someone will remember the terms of a contract signed 5 years ago. Senator Allison Copening agrees.
"There's a standard we need to uphold for our consumers," says Copening.
She's the author of Senate Bill 290, designed to prevent what she calls unfair contract extensions. The measure would require a business to notify a consumer 30 days before making any change to the original contract. Copening says the Nevada Attorney General spends hundreds of thousands of dollars fighting these types of cases.
"Why are we wasting our AG's dollars fighting these. Why not pass a law and simplify the entire process and protect the consumers at the same time," says Copening.
But her bill failed to pass the Senate Commerce, Labor and Energy Committee last year. Although she's not running for re-election, Copening says she hopes to have it looked at again by the 2013 legislature. Meantime, Miguel and Isora are stuck having to pay for a service they don't want, through April of next year. And they want to warn others.
"Check specifically what it says about renewal. Because that's what the key is. And make sure you read the rest of the contract," says Miguel.
So here's the Contact 13 bottom line. Make sure you understand any contract you sign, especially if you're looking to change or cancel the service. Ultimately if you signed the contract, you will be held responsible. And even though any attempt to change the law is still a work in progress, the state can help. Like Miguel and Isora plan to do, you can file a complaint with the Nevada Attorney General's Bureau of Consumer Protection. For Contact 13, I'm Tricia Kean.