Licensing fight prompts UNC to cancel contract for automated license plate readers

A Wake County judge has ordered a fast-growing Atlanta-based tech company to stop installing automated license plate cameras for law enforcement and other clients across the state, finding the firm has been operating unlicensed in North Carolina for years.

The legal dispute — between Flock Safety and the North Carolina Alarm Systems Licensing Board — has already cost the company a contract with UNC-Chapel Hill. The university nixed its plan to have Flock install nearly two dozen surveillance devices across campus, a UNC spokesperson told The News & Observer late last week.

Flock’s automated license plate reader devices are already in use by dozens of police departments, sheriff’s offices and homeowners associations in North Carolina. Prominently marketed as a deterrent to crime and a tool to solve cases of everything from car theft to child abductions, the devices keep records of passing traffic and can alert law enforcement when they detect matching plates or vehicle descriptions.

The growth of automated license plate readers — from Flock and its competitors — have alarmed some civil rights and privacy advocates like the American Civil Liberties Union, who have warned about the potentially negative consequences of unregulated, networked mass surveillance.

North Carolina law does require law enforcement, with few exceptions, to delete captured license plate data older than 90 days. Police departments and sheriff’s offices are also generally prohibited from installing the devices on state-maintained highways.

But the regulation now at issue isn’t specific to plate readers.

Which rules apply?

Wake Superior Court Judge Vince Rozier Jr. last week found the company has continued to violate a state law requiring a license for anyone who installs cameras and other alarm systems to detect illegal activities. The company’s actions “are an immediate and direct threat to the public health, safety and welfare,” Rozier ruled.

His order temporarily bars Flock from installing additional camera systems or maintaining its current devices unless it uses a licensed third party.

In court filings earlier this year, Flock contended the Alarm Systems Licensing Board has no authority to regulate the company and that Flock is “not in the alarms systems business.”

Flock spokesperson Josh Thomas told The N&O in an email last week across the 42 states where Flock operates, North Carolina is the only one to require such a license.

“We have been operating in North Carolina at the request of law enforcement, under the assumption that because we are a public safety technology company that provides objective evidence for law enforcement to solve crime, these rules didn’t apply,” Thomas said.

Paul Sherwin, whose division at the state Department of Public Safety supports the Alarm Systems Licensing Board, declined to comment on the specifics of the Flock case, citing ongoing litigation against the company.

But Sherwin said there’s nothing in state law that exempts companies from licensing depending on who’s using an alarm or security system. What triggers the statute, he said, is the intended use of the cameras to detect illegal activity — and whether an employee of a company is physically installing the devices on site.

The law requires companies and its technicians, which could have access to sensitive security information about consumers or government agencies, to undergo background checks and register with the board.

“The whole purpose is to protect the public by regulating who is coming in and installing the security system,” Sherwin said.

Company took months to apply for license

Flock is now actively pursuing a license from the state and applied for one “once we became aware of this interpretation” from the alarm systems board, Thomas, the company spokesman, said.

But the company didn’t submit its application until June 2023, according to Sherwin.

That’s almost a year-and-a-half after the board sent a January 2022 a cease-and-desist letter to the company demanding it stop advertising, installing and maintaining security alarm services in the state. After months of back and forth, the company unsuccessfully contested the licensing decision in a meeting with the board in November 2022.

“(Flock’s) representatives left that meeting knowing and understanding that a license was required for it to continue to engage in business in the State of North Carolina,” the lawsuit filed against the company in February 2023 said.

And as of this week, the company’s application remains incomplete, Sherwin said.

In the meantime, the licensing dispute has already cost the company at least one contract.

UNC ditches Flock cameras

UNC Police Chief Brian James told university trustees in September that his department was “in the process of getting” Flock plate readers installed on campus. The decision to obtain the readers had been made prior to the fatal shooting of associate professor Zijie Yan on-campus, trustee Marty Kotis told The News & Observer, but the deal wasn’t finalized before the Aug. 28 killing.

Flock technology allows police to search for any license plate for up to 30 days after plates are logged. Police say Tailei Qi, a graduate student charged with killing Yan, drove to campus on Aug. 28 and then fled by foot

The university was set to receive 22 readers at a cost of about $80,000, including installation costs, according to information the UNC media relations office provided The N&O in September.

Kotis told The N&O Thursday that the university pursued Flock, as opposed to other license plate reader systems, because of the “network” of data and information it would allow the university to access. That included information collected by Flock’s readers at other UNC System universities.

The university entered into a contract with Flock on Sept. 15, UNC Associate Vice Chancellor of Communications Beth Keith told The N&O by email Friday. But an Alarm Systems Licensing Board lawyer informed the university on Sept. 30 that Flock “was not licensed to do business in North Carolina,” Keith said.

The university has since terminated its contract with Flock, but is “committed to working with a license plate reader vendor that will help us accomplish our safety goals,” Keith said.

Two other universities in the system, N.C. A&T State University in Greensboro and UNC Charlotte, have Flock readers installed, according to Andy Wallace, a UNC System spokesperson.

The N&O has requested draft and proposed contracts from UNC, including those that have been voided, but the request has not been fulfilled.

“The unfortunate thing about all of this is it just has been holding up the contract we had with them to install license tag readers,” Kotis, the UNC trustee, said of the litigation against Flock.

Thomas, the Flock spokesperson, told The N&O in an email last week that in compliance with the court order, the company does plan to use licensed third parties “to continue operating this critical technology.”

But it’s unclear exactly how the court case will impact contracts with the firm’s other clients across the state.

At least eight other law enforcement agencies, including the Raleigh Police Department, have received notifications from the alarm systems board similar to the one UNC received in September, Sherwin said. The letters say the company’s failure to obtain a license means its contracts with cities, counties and universities are “likely void.”

The next hearing in the licensing board’s case against Flock Safety is scheduled in Wake County court for Nov. 27.

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