If you concluded an open-ended remote monitoring service contract on or after June 30, 2010, the service provider is subject to rules that limit the cancellation fees that can be charged. These rules provide that, with some exceptions, the remote monitoring service provider cannot charge cancellation fees.

Exceptions: possible cancellation fees

Merchants may charge cancellation fees when they accept that :

• you do not pay for the alarm system in full when you sign the contract;
• the amount you did not pay gradually decreases every month.

In such a situation, the later you cancel your contract, the lesser the fees will be.

Calculating the cancellation fees

If the exception applies, here is the formula to allow you to calculate the maximum cancellation fees you can be charged.

[Unpaid amount on the sale price of the alarm system at the contract signature date] - [1/48 x Unpaid amount on the sale price of the alarm system at the contract signature date x Number of complete months elapsed] = Maximum cancellation fees

Sample calculation of cancellation fees

When you signed your contract, the merchant provided equipment with a value of $150. You did not pay this amount. Each month, the service provider decreases the $150 total by a certain amount. You decide to cancel the contract in the 22^nd month.

To figure out the maximum amount that can be charged, the provided must apply the following calculation :

$150 - (1/48 x $150 x 22), simplified as $150 - $68.75 = $81.25

The service provider can charge a maximum fee of $81.25.

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