When you're shopping for a home alarm system, I have a new warning for you about the contract that I've never had to give before.

Read more: 13 things a burglar won't tell you

Beware of these dirty dealings in the alarm industry

Unsavory players in the home security field have come up with a new way to rip you off. Here's how it plays: When you sign a contract, you're not given a physical copy. What happens instead is you sign on a tablet or smartphone. The terms and conditions are in tiny type and you sign with either your finger or a stylus.

That's bad for obvious reasons. They can promise anything and rip you off for multiple years and you signed your name to it! I know people don't like to deal with lengthy contracts. At the very least, skip past the legalese and read the part about what you're agreeing to at what price and for how long. The second part you must familiarize yourself with is under what conditions you can terminate the contract.

Most play it straight in this industry, but watch out for the bad guys

Some years ago, while eating breakfast at a fast food joint, I eavesdropped on a conversation at a nearby table. Based on what I overheard, it seemed two of the men were employed by a security alarm company and in the process of interviewing a young 20-something man for a sales position.

The young man was told that the job involved obtaining recent police burglar reports and then going door-to-door in those neighborhoods. The men told the young man that a good tactic was to let customer's imaginations run wild after showing them the police reports. Then, go for a monthly contract of from $24.95 to $39.95, whatever he could get out of them and pocket the spread.

Talk then ran to rollover contracts. That's what happens to contracts when customers don't contact the security company about their intentions at the end of the contract term. That contract simply renews on its own for another contract period.

Here are my tips to follow when your home needs security and you don't want to be swindled

  • First, ask if a potential company requires a contract. You never want to sign a long-term contract. If you do, you open yourself to the danger of hidden rollover provisions.
  • Your second question should be about their monthly monitoring fees. You should be paying in the mid-to-high teens per month at most.
  • Next, ask about equipment installation costs. You can usually get a preliminary quote over the phone by counting the number of doors and windows you have to protect. Consider adding an internal motion sensor as well.
  • Initial equipment installation costs can be anywhere between $600 and $800 for a typical home. It's better to pay upfront for a system rather than getting it "free" and having huge costs built into the monthly monitoring.
  • Finally, make sure your monitoring station is UL approved and also offers fire detection.
  • You might also consider SimpliSafe.com, a company that offers $15 a month monitoring on simple burglar alarm systems you install yourself. No technical know how is necessary! Read an extensive review of the service here.
  • Don't forget about the basics of home security. This article about 13 things a burglar won't tell you has some sobering reminders about the simple things we do that inadvertently invite burglars into our homes.

Read more: 6 smart home security inventions for 2015

Want more money-saving advice for your home? See our Homes & Real Estate section.


Image of Clark Howard About the author: Clark Howard

Clark Howard is a consumer expert whose goal is to help you keep more of the money you make. His national radio show and website show you ways to put more money in your pocket, with advice you can trust. View More Articles

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