Axon Hints It May Ruin A City's Credit Rating For Cancelling Its Contract For Body Cam Footage Storage

from the retention-specialists-are-the-worst dept

Axon -- formerly Taser -- is betting big on police body cameras. It doesn't care much about the hardware. That's the just the foot in the door. The real money is subscription and storage fees. These contracts are worth far more than the hardware, which Axon is willing to give away to secure a far more profitable revenue stream.

Axon not only charges for storage of recorded footage but also for access. It provides a front end for law enforcement agencies to search uploaded footage. It also makes defense lawyers do the same thing -- putting itself (and a lot of contractual language) between accused criminals and the evidence they're legally entitled to have.

Emails obtained via a public records request show Axon plays hardball with municipalities who decide they'd rather use a different vendor. When a California city decided to take its business elsewhere after four years with Axon, its representatives responded by threatening to trash the city's credit rating. Beryl Lipton has the details for public records request powerhouse MuckRock.

FPD [Fontana Police Department] discontinued its use of the Axon body cameras, and Evidence.com became increasingly irrelevant. Nonetheless, as part of the five-year agreement with Axon, the department continued to pay over $4,000 a year for the service. “Our IT people came to me and said, ‘Hey, we have this contract with them that we’re continually paying on, but we’re not using them anymore. Is this something we can look at getting out of?’” said [Lieutenant Joseph] Binks, who handles departmental purchasing. “We did an audit and all the cases that we were working had all been [closed], so we really didn’t need a contract with them.”

The city informed Axon its cloud services were no longer needed and got this response from an Axon rep:

The only cancellation term is Termination for Non-Appropriations or lack of funding. There is a negative effect, however, as it can affect the credit rating of the City. Since we are looking at about nine months it would probably make more sense to ride out the rest of the contract…

It's at this point that Axon becomes indistinguishable from a cellphone provider or Dish Network or any other company that uses contractual language to discourage people from taking their business elsewhere. But the rep's statement wasn't actually true. The city had another option -- one it was unaware of until MuckRock reached out for comment on this article.

According to purchase orders, emails, and the terms and conditions of the agreement released by FPD, the order for the five body cameras included two other options for cancellation in addition the Termination for Lack of Appropriation clause: one for a Contractor’s failure to deliver as promised; the other, for a Termination for Convenience.

This option allows the PD to break its contract without Axon dinging its credit record for… well, deciding not to continue paying Axon for a service it wasn't using. Confronted with this, Axon refused to comment, citing the "confidentiality" of its agreement with the City of Fontana -- the terms of which the city had willfully turned over to the public in response to a records request.

Axon's cheap/free cameras are the hook. The real money is in subscription and storage fees. According to SEC filings, Axon is pulling in $160 million a year in storage and access fees for its body cam products. This number has tripled over the past three years and will likely surpass the amount it earns from device sales in the next couple of years.

It's unsurprising Axon is doing everything it can to squeeze every drop from this revenue stream. But that doesn't excuse threatening former customers' credit ratings to keep them on the hook for services they're not using. Government agencies also need to be aware of what they're getting into when a body cam vendor shows up with free cameras and several pages of dense legalese. It's not the sort of job that should be left to public records requesters to do the government's work for free.

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Filed Under: body cameras, contracts, credit, evidence.com, fontana, fontana police department, police

Companies: axon, taser