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What to know before you sign a home alarm contract this new year

These days, many of us want a home security system. But a caution — if you sign up for one, make sure you know the penalties if you ever want to get out.

Thinking of buying a home alarm for the new year or maybe upgrading your system to one a bit more high tech?  

These days, many of us want a home security system. But a caution — if you sign up for one, make sure you know the penalties if you ever want to get out.

Mike Barker bought a new high-tech alarm system for his condo. A salesman convinced him to sign up. 

"I was approached by a door-to-door guy, said he was with ADT, wanted to know if we would be interested in an alarm."

Barker said he trusted the ADT name so he signed up for it. But two months later, he needed to trim expenses so he decided to cancel. 

"I called them up and asked them if we could cancel. Then I found out that ADT didn't sell this to us, it was a local agent," Barker said. 

The second surprise, it would cost over $1,000 to cancel.

"The cancelation charge was 75% of any unused months. Yeah, I'm gonna owe $1,295 to get out of it," Barker said. 

He does not recall the salesman explaining there would be a 75% fee to terminate early. 

ADT, the grandfather of alarm companies, has a very good reputation. But many of its alarm systems are sold by third-party vendors and lengths of contracts can vary.

When we reached out to ADT they said, "The salesman reviewed each section of the contract with the customer in person. The contract term of 36 months is one of the sections that require a signature."

An ADT corporate spokesman, meantime, said early termination fees are standard in the industry, which is how it keeps installation costs so low. Barker, though, thinks a 75% fee to cancel is crazy in 2021. 

"I was just flabbergasted."

So, if you're offered an alarm system, find out who you are really buying it from. Then ask about cancelation policies so you don't waste your money.