ADT Customer Seeks Class Cert. in Vulnerable Security System Lawsuit

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Claims over a vulnerability in ADT wireless security system may get class action status following the plaintiff’s motion for certification.

Plaintiff Janet Cheatham filed a motion last week seeking certification for a Class of customers who subscribe to ADT wireless security service. She claims that ADT failed to alert her and thousands of similarly situated Arizona ADT wireless customers to a vulnerability in the company’s wireless system.

Cheatham alleges her ADT wireless security system relies on an unencrypted radio signal between the system’s control panel and the remote alarm sensors distributed around the house. The lack of encryption makes the system easily hackable using readily-available electronic equipment, she claims.

The problem was first publicly revealed in a Forbes magazine article in July 2014, Cheatham says. But even though ADT allegedly knew about this security vulnerability, Cheatham claims the company failed to disclose it to customers.

Meanwhile, ADT continued to court new customers to enter into long-term contracts for ADT wireless home security services, without alerting them to this supposed vulnerability.

Cheatham says ADT and its main equipment supplier Honeywell went so far as to suppress a July 2014 public presentation on the vulnerability by an Oak Ridge National Laboratory employee.

She says ADT also decided not to take any corrective action to remedy existing ADT wireless systems, citing concerns about labor costs.

Cheatham initiated this ADT wireless class action lawsuit in September 2015.

The plaintiff says she bought an ADT wireless security system for her own home in May 2013, in reliance on the promotional materials on the company’s website.

A few months later, Cheatham claims she came home to find that items inside her home had been moved around. It was only then that she became aware of the vulnerability of her ADT wireless system, she alleges. Had she known about the vulnerability earlier, she says she never would have bought the system or signed up for ADT service.

Cheatham claims that by failing to disclose the vulnerability of ADT wireless systems, ADT has violated the non-disclosure provisions of the Arizona Consumer Fraud Act. She is also bringing a common law claim for unjust enrichment.

Her ADT wireless class action lawsuit largely survived the company’s motions for dismissal.

This past February, U.S. District Judge David G. Campbell allowed the action to continue against ADT LLC after trimming claims against holding company ADT Corp.

The judge also said certain statements in ADT promotional materials were only statements of opinion, not representations of fact on which a claim for fraud could be based.

But other promotional statements at issue, such as promises of “reliable security protection” and protection against “unwanted entry and property loss,” could partly support a fraud claim, the judge said.

Delaware-based ADT is one of the largest nationwide providers of home security systems, serving nearly 7 million customers across the country, according to Cheatham.

If certified as proposed, Cheatham’s plaintiff Class will represent all Arizona residents who entered into a contract for an ADT wireless residential security system between Sept. 9, 2012 and Aug. 15, 2016. This Class could include as many as 30,000 existing Arizona customers whose alarm systems rely on ADT wireless signals.

The plaintiffs are represented by attorneys Francis J. Balint Jr., Andrew S. Friedman and William F. King of Bonnett Fairbourn Friedman & Balint PC.

The ADT Wireless Security Vulnerability Class Action Lawsuit is Janet Cheatham v. The ADT Corporation, et al., Case No. 2:15-cv-02137, in the U.S. District Court for the District of Arizona.

UPDATE: On Jan. 10, 2017, home security company ADT told a federal judge that a class action alleging their wireless security systems are vulnerable to hackers should be dismissed because the plaintiffs can’t adequate represent the diverse claims that could be brought by a Class.

UPDATE 2: On Jan. 24, 2017, ADT agreed to settle five separate class action lawsuits filed by consumers who claim the company misled device owners about the vulnerability of their home security systems to hacking.