Many small businesses install security systems to protect against burglaries and other crimes. But when those alarms get triggered accidentally and emergency response teams show up, the business owner often must foot the bill.
Brent Frederick, owner of a popular Minneapolis restaurant called Borough, paid $2,830 to the city in 2013 due to eight false alarm calls.
“The city is doing its job,” Frederick told the Minneapolis Star Tribune. “The only thing I have an issue with is how much they are charging us. It’s astronomical.” Ten miles away in St. Paul, Minnesota, his business would only have paid only $500 for those same eight false alarms.
Last year, Minneapolis businesses and homeowners paid more than $2.5 million in false-alarm fees to the city, a Star Tribune inquiry found. The downtown Macy’s department store paid nearly $40,000, and the local school district paid more than $22,000.
Small-business owners, however, say they often get hit hardest with false-alarm fees because it’s easier for their security systems to get accidentally set off, and because such fees can take an oversized toll on their bottom line.
Serendipity Road, a clothing boutique that opened last November, has paid Minneapolis $330 for three false alarms so far this year—the equivalent of three days’ worth of sales. “We are a new business, and that really hurts us,” says owner Will Determan.
Many cities have been cracking down and raising their false-alarm fees on businesses in recent years. The Wichita City Council in Kansas recently passed an ordinance requiring businesses to register their alarm systems with the city. Portland, Oregon charges businesses with alarm system permits $50 for their second false alarm and $150 for their fourth. (Portland police will stop responding to alarms at the business after the fourth response, unless the business fills out a reinstatement form and agrees to pay $150 for each false alarm.) The city of Portland offers an online tutorial on how businesses can prevent false alarms.
The City of Los Angeles’ website reports that police officers respond to 6,000 to 7,000 calls each month, and more than 90 percent of those are false alarms. The city asks businesses and residents to get permits for their alarm systems and just recently began charging fees for false alarms. Businesses without alarm-system permits pays $262 for their first false alert, while those with permits pay $162. The fees rise as a business experiences more false alarms in a year, topping off at $562 per false alarm for those with four or more.
But not everyone thinks charging businesses fees for their false alarms is unfair. In fact, some economists point out that the cost of false alarms to local police departments and taxpayers is huge.
In 2012, Freakonomics reported that 94 to 99 percent of all burglar-alarm calls are false and police departments spent an estimated $1.8 billion in 2000 responding to false alarms, based on research by Temple University economist Simon Hakim.
Read more articles about cash flow.
Photo: Getty Images