ESA Requests Court stay FTC Negative Option Rule

The Electronic Security Association INC (ESA) continues its fight to protect the automatic renewal of security and life safety contracts on behalf of its members. 

On October 22nd, 2024, ESA and some of its members filed petitions for review with the United States Court of Appeals. What follows is usually a lottery to determine which Court would receive the case. Initially, the FTC claimed they did not have to forward the petitions to the Court of Appeals (which starts a lottery process to determine which Court will hear the case) because they had not yet published the new rule in the Federal Register. ESA’s legal team then filed an emergency mandamus petition with the Fifth Circuit Court of Appeals. The Court agreed with ESA and its members and ordered the FTC to comply with protocol and allow the lottery to commence. Now ESA finds itself in the Eighth Circuit Court of Appeals where it requests the Court to stay the FTC’s Negative Option Rule. 

The United States Court of Appeals for the Eight Circuit comprises Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.  

Joining ESA as a petitioner is ESA Board member Melissa Brinkman, of Custom Alarm. Melissa stated “ESA members like me use subscription plans to provide security and life safety service to consumers and businesses. If these services are inadvertently or maliciously terminated, homes and businesses may be left unprotected.  It is therefore important for electronic security companies to ensure continued, uninterrupted electronic security service.”  

Indeed, much of the industry relies on the use of automatically renewing month-to-month or annual contracts. These contracts already build in a great deal of flexibility for the consumer and unlike bad acting jelly-of-the-month type businesses the security and life safety industry deals with its customers openly and honestly. 

 “An easy to cancel button sounds fine until it is clicked accidentally, and services are terminated immediately. Requiring notifications to be sent out to prior to a contract renewing sounds fine until a consumer changes their address, phone, or email. Then where is the liability when the consumer assumes their security or fire alarm was still working? We not only feel this rule is too harmful to the industry, but we also don’t believe the FTC even has the authority to make it.” says Jake Braunger, Vice President or Advocacy and Public Affairs.

The request to stay the rule was filled on December 5th, 2024. The purpose of the request is to ask the Court to temporarily suspend or halt the new rule from the FTC until the case is heard. 

Established in 1948, ESA is the largest trade association in the United States representing the electronic security and life safety industry. Member companies install, integrate and monitor intrusion and fire detection, video surveillance and electronic access control systems for commercial, residential, industrial and governmental clients. ESA provides technical and management training, government advocacy and delivers information, advice, tools, and services that members use to grow their businesses and prosper. 

Together, ESA member companies employ more than 500,000 industry professionals and serve more than 34 million residential and commercial clients.