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American Public Media

NPR program rips industry over false alarms

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Wednesday, April 4, 2012

American Public Media’s “Marketplace” weighed in on false alarms this week, with the featured guest delivering a decidedly unfavorable verdict for the security industry: Alarm customers might be better off relying on a dog.

Program host Kai Ryssdal interviewed Stephen Dubner of Freakonomics.com, who cited a litany of figures and study results that don’t reflect well on alarm companies. Here’s a bit of what Dubner had to say on the show, which aired on National Public Radio:

—“We talked to Simon Hakim, an economist at Temple who’s been studying this issue for a long time. He says that in a given year, U.S. police respond to more than 35 million alarm activations. … Something like 95 percent of them are false alarms and the cost is about $2 billion.”

—“Financial analysts say that industry leader ADT ... has an operating margin of about 25 percent on roughly $3 billion [in] annual revenues. So these false alarms pose what economists call a negative externality. That is, the provider charges you for the service, but then they pass along a big part of their costs to someone else. In this case, the police departments and the taxpayers who support them.”

—“Well, it’s probably a good idea to make the alarm companies more accountable in some fashion, including having them make alarms that don’t fail so often. … As for me, I think I’m just going to ditch my new alarm that seems to go off every five minutes.”

Dubner then referred to his new deterrent—growling can be heard in the background—and told Ryssdal, “Go ahead. Make my dog’s day.”

On the positive side, Dubner quoted Hakim as saying that alarm systems deter burglars to some degree, citing “the sign in the yard and the threat of the alarm and the police.” He also quoted Ron Walters, director of the Security Industry Alarm Coalition, who said false alarms are SIAC’s “No. 1 priority. This is the one issue that we have decided has to be addressed.”

The incidence of user error was briefly mentioned, along with the move toward more video monitoring to verify whether an alarm call is legit. But that was about it for the bouquets, which points to the long-standing need to better educate customers and improve relationships with law enforcement to reduce false dispatches.

It’s either that or the doghouse.