This article originally appeared in the October 2023 issue of Security Business magazine. When sharing, don’t forget to mention Security Business magazine on LinkedIn and @SecBusinessMag on Twitter.
My family does not watch a lot of TV, but we do watch sports. Watching sports is fun – it is the original reality television; however, it also means you see a lot of commercials for beer, trucks, fast food, and car insurance. Actually, car insurance commercials are featured in all sorts of television programs, because there are a lot of competing car insurance companies with large advertising budgets.
Why is that? Because the law in every state requires that, to own and operate a car, you must have insurance. Therefore, the demand for car insurance is very high, and when demand is high, there are usually more entrants into the marketplace. Although insurance is a heavily regulated industry and the barriers of entry are high, we can tell from just watching television commercials that there are many insurers out there – like Liberty Mutual, GEICO, State Farm, Allstate, and others. The takeaway is that legal mandates like car insurance requirements breed economic opportunity.
Now, let’s apply this fundamental concept to the business of electronic security – particularly in the intrusion security market. Imagine that every state passed a law that required all home or business owners who purchase an intrusion system to purchase a sensor on every potential access point in their home. This would be an epic boon for the security industry – resulting in billions of dollars of sales for existing market participants and in many new entrants to the market. This would also inherently increase security.
Or…maybe…such a legal mandate would be completely impractical (hint, it is) – because it would result in many potential customers electing not to purchase intrusion systems because such systems would be rendered unaffordable. If the customer is mandated to buy a sensor for every access point, that would sharply increase the cost of these systems.
This is contrary to established public policy – which seeks to make security systems more affordable and widely available. Indeed, courts across the country for decades have advocated for the affordability and availability of security systems (albeit in the context of enforcing contractual limitations – such as limitations of liability – which help make the systems affordable).
These issues are of particular interest to me, as a litigator. I have defended many cases across the country where an allegation is made against a security company that they failed to protect the subscriber because a sensor was not installed on a particular access point (usually the one the bad guys used to enter the home or business). While such allegations may seem superficially meritorious, they fail when you consider the issue more critically.
Why it Should be a Customer Decision
Every security integrator in the world would love to sell as many products as possible. They are in business to make money. If the law mandated that every intrusion system must protect every possible access point, the industry would be thrilled. However, that is not the law – nor should it be (for the reasons stated above). Instead, the market should and does guide these choices, meaning the customer decides what they can and cannot afford to install in their home or business. If a customer wants a sensor on every possible access point and is prepared to pay, then the security company will gladly install sensors on every door, window, and other access point. Indeed, technicians often receive sales commissions for upselling additional devices – so the incentive to add sensors is clear.
What the industry cannot bear is a circumstance where security companies are held to account for the decisions of their customers. That creates a circumstance where security companies would be foolish to install anything but a system with sensors everywhere. This all or nothing approach is what would result if security companies are blamed when their customer orders a base package of devices and then elects not to add devices for other doors or windows – even when they have the system for months or years.
A security company cannot compel a customer to buy devices – only the law can do that. For the reasons stated above, the law does not do that. Instead, as a public policy matter, the law should and does encourage customers to buy what they want and can afford, even if the products and services they purchase do not completely and immediately fortify their premises.
If a customer wants or can afford only a base package of devices, then the law allows them to purchase what they want or can afford and holds them to their choice. This applies to all customers, whether they are in a 10,000-square-foot home or a 500-square-foot apartment. In either scenario, the customer need not purchase a sensor for every door and window, and that choice should not be foisted upon them.
When driving a car, you must be insured. You have no choice. That is the law. Not so when buying an intrusion alarm system. You can buy it or not buy it. You can add to it or not add to it. You can use it or not use it. Security companies can help, but, as a matter of fact and law, customers make these choices and should be held to them.
Timothy J. Pastore, Esq., is a Partner in the New York office of Montgomery McCracken Walker & Rhoads LLP (www.mmwr.com), where he is Vice-Chair of the Litigation Department. Before entering private practice, Mr. Pastore was an officer and Judge Advocate General (JAG) in the U.S. Air Force and a Special Assistant U.S. Attorney with the U.S. Department of Justice. Reach him at (212) 551-7707 or by e-mail at [email protected].