The Question:

We do business in a state where burglar alarm companies must have a state license, and a separate, different, state license is required for fire alarm work. Recently we have discovered that some of our competitors are unlicensed.

In one case it seems that several years ago the alarm company underwent some type of business restructuring resulting in the parent "holding" corporation retaining all of the required licenses, and the "operating" corporation being unlicensed. In another case, it appears the alarm company is advertising and using the licenses issued to another company.

Thus it appears that these unlicensed alarm companies are unfairly competing against all of the other companies that are properly licensed, and consumers are doing business with unlicensed entities pursuant to, I presume, unenforceable and uninsurable subscriber agreements. What are the possible ramifications of this? What remedies are available to consumers or competitors? Do contracts address the licensing aspects of this?

Signed,
Licensed guy

KEN'S ANSWER:

First let's deal with the what you as a licensed alarm company can and should do about unlicensed competitors: Report them.

The governmental agency that is responsible for licensing will be able to handle your complaint of unlicensed persons or companies, or they will refer you to the proper authority for enforcing the licensing statute. The penalty for conducting business without a license varies from monetary fines to stiff criminal sanctions. The remedy, however, is almost always action by the licensing authority or the state, and not an individual or private right or cause of action. In other words, you most likely have no right to enforce the licensing requirements.

In New York, where I am located, your complaint could be made to the Secretary of State, who licenses the alarm companies, the local district attorney, who enforces the criminal laws, and the State Attorney General, who also enforces state laws and pursues deceptive trade practices. Other states have the equivalent of these official officers.