Sales representatives from several unlicensed companies are going door-to-door offering homeowners in different parts of Oahu deals that sounds too good to be true. They probably are.
To get the free or heavily discounted security systems, homeowners agree to pay a monthly fee for a service that monitors the alarms and notifies police or emergency responders in case of a break-in or fire.
But companies making similar door-to-door offers on the mainland, often using teams of college students who work just during the summer and then disperse, have generated numerous complaints of shoddy workmanship, failure to provide support, lack of disclosure, overcharging, and other problems, according to published news accounts and web sites that gather consumer complaints.
Typically, the monitoring contracts are sold to other companies on the mainland, leaving local customers without any source of service or support when problems inevitably arise.
Established local security firms say there is growing anecdotal evidence that similar problems here are widespread.
One company operating in Windward Oahu and on the North shore is Security One, of Orem, Utah. Its sales people are knocking on doors offering to install security systems valued at $1,200 for free in exchange for placement of a company sign in front of the home, a $99 “activation fee”, and a monthly monitoring fee paid to a Texas-based company, Monitronics.
Arthur Hannemann, who heads the Hawaii sales operations for this Utah company, defends the free offer as a limited-time promotion.
“It’s generating a lot of business,” Hannemann said.
“We are a legitimate company,” Hanneman said. “We have offices all over the United States. We are not doing anything illegal or unethical.”
Hanneman describes Security One as a ten year-old company which has just recently started doing business in Hawaii.
But the company has already caught the eye of state regulators. A February 2009 letter from the state’s Regulated Industries Complaints Office warned the company that it might be violating state law by operating without a contractor’s license.
State business registration registration files available online from the Department of Commerce & Consumer Affairs have no record of the Utah-based firm being registered to do business in Hawaii.
When asked about the issue this week, however, Hannemann denied that there had been such a letter.
“That’s not true,” Hannemann said.
Security One is not the only alarm company to have been warned about unlicensed activities or have new consumer complaints pending and under review by state regulators, records show. And established firms say they have heard numerous complaints from customers who are reluctant to contact authorities.
The Utah-based Security One is also in trouble for using the name and logo of an established alarm company doing business in Hawaii since 1992, according to Mary Paulson, owner of the Honolulu-based company, Security One, Inc.
Paulson said her attorney wrote to the Utah firm earlier this year with a demand that they stop using her company’s name.
“I thought we had them run out of town,” she told me by phone.
Hannemann responds by accusing Paulson of making “false accusations”.
“She’s been a real problem for us. She’s has done a lot of incredible things,” Hannemann said, including going on television and complaining to regulators.
The Utah company’s pitch was delivered in Kaaawa last week by a young man who entered our yard and identified himself as a BYU-Hawaii student. None of the literature he provided about the company or its security systems includes a local business address or telephone number, and he offered only a personal cell phone number as a contact.
Gary Putnam, of Lifeline Fire & Security, Inc., another established local operator, said he advises consumers to check out any company claiming to be locally based.
Paulson suggests consumers ask if the company has a local office and phone.
“I tell them to just go in the house and look in the Yellow Pages,” Putnam. “If the company isn’t there, then look in the white pages. And if you still can’t find a listing, call 411.”
Putnam said state law gives consumers three days to cancel any door-to-door contracts, but after that “you’re locked into a three-year contract.” Paulson said he had been told of customers who were unable to reach the salesman or the company before the three-day window closed, despite wanting to cancel their contracts.
“They didn’t answer the phone,” he said.
A New York Times story published last week describes door-to-door salesmen with Mormon backgrounds working for another Utah firm, Pinnacle Security, which is also based in Orem, Utah, a small city of less than 100,000 residents.
The New York Times reported:
The salesmen are mostly former Mormon missionaries from Utah who cut their teeth — and learned their people-skill chops — cold-calling for their faith. In Chicago and in its suburbs where their employer, Pinnacle Security of Orem, Utah, has shipped them for the summer sales season, they are doing much the same thing, but as a job.
“It’s missionary work turned into a business,” said Cameron Treu, 30, who served his mission in Chile and was recruited into D2D (that is door-to-door in sales lingo) by another former missionary.
Art Hannemann, of the Utah-based Security One, is a cousin of Honolulu Mayor Mufi Hannemann, and earlier this year was named president of the 1st Stake at BYU-Hawaii.
According to the university’s web site:
The Church of Jesus Christ of Latter-day Saints has 20 wards (congregations) organized into 3 stakes (dioceses) on the BYU-Hawaii campus. About 100-150 students attend religious services in each ward. The experience that students gain in these wards as they carry out church responsibilities provides the LDS Church with a rich source of leadership when students graduate and participate in wards in their homelands around the world.
The Utah-based Security One recruits students with a web site, “Make more money than your dad.com“, claiming students can earn up to $100,000 during the summer from alarm sales. The site also links to a recruiting video, which some have called a “must see”.
Another company, Maximum Security or Max Alarm, recruits with a web site asking:
How Do You Want to Spend Your Summer?
Working in Idaho for only $10 an hour?
OR…SELLING HOME ALARMS UNDER THE HAWAIIAN SUN!
The Maximum Security also spells out how much can be earned off of those monitoring contracts, with sales persons able to earn as much as $540 per system installed, even if the system itself is free.
A lawsuit filed in federal court in Utah by one of the large monitoring firms describes how the alarm industry works.
Within the security monitoring industry, independent dealers solicit customers for alarm systems and alarm monitoring service through a variety of methods, including door-to-door and telemarketing.
The door-to-door solicitation is done primarily in the summer months as some independent dealers primarily use college students to do the solicitation during their summer breaks. These independent dealers being their recruiting of these students each fall for the following summer.
Where dealers’ salespersons are successful in signing up customers, the dealer typically enters into two contracts with the customer, one for the sale and installation of the alarm monitoring equipment (the “Installation Agreement”) and a second alarm monitoring agreement related solely to the monitoring of the customer’s premise (the “Customer AMA”.
The typical Customer AMA provides for the monitoring of that customer’s premises for a stated term, usually three (3) years, with automatic (1) year renewals thereafter. The average lifespan of a Customer AMA is for a period of eight (8) to ten (10) years.
The independent dealers usually offer to sell their Customer AMA’s to separate alarm monitoring companies….”
The Utah lawsuit also describes other unfair sales practices, including stealing existing customers from other companies by claiming to be installing a required system “upgrade”, claiming the original installer had “gone out of business”, and other tactics.
The arrival of the summer sales teams has hurt the rest of the companies, Paulson said.
“Most of the local alarm companies are established. We’ve got expenses for offices, insurance, staff. Then here come these guys, they aren’t licensed, they don’t have an office, they put in cheap systems and end up disappearing,” Paulson said. “They can’t service their clients. It’s a scam.”
Putnam said he doesn’t mind competing, “but let’s not do it by lies, deceit, and misrepresentation.”
There is no shortage of consumer horror stories to be found online, which describe the kinds of problems that can arise. Check out sites like alarmsales.org, BuyerZone.com, ConsumerAffairs.com, RipoffReport.com, as well as numerous news stories. A quick Google search turned up a number of recent reports.
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Weird. Just last week I was stopped in my driveway in Mililani by a guy pushing a security system. He wanted to come in, and said he didn’t have a card. I said I wasn’t interested, and he said that one of our neighbors was just robbed. He said if several neighbors bought in, he could offer a discount.
He was well dressed, shiny-faced and articulate, but definitely sending off scammy vibes.
I love how the ad served up for this post is for a security alarm marketplace.
Go contextual ads! Good story, interesting that none of our local dailies has picked it up given that the mayor’s cousin is running this fly-by-night security outfit.
Great stuff, Ian. I don’t wish you continued unemployment but, if it means we get good information like this, we’re all the better for it.
I won’t be surprised to see a story on this soon in one of the dailies, now that you’ve done the work.
At least when I sold encyclopedias D2D in LA the summer of ’69,we actually delivered the books. We did try to get them on the $10/month for 10 years tho. Only sold 2 sets,what with Charley Manson killing folks. Did see Jimi for free tho.
Once and always a fan of your reporting, Ian. I’ll be away and wish I could check out if the dailies pick this up or not. Thank you!!!!
great entry… that pic on the utah-based security one website made me laugh. wear a suit and lean against a shiny car… wooo.
Great job with the research Ian, as usual.
I have a brother and nephew who both sold Cutco knives D2D years ago. They did rather well and learned a lot. But those were real products and good quality too. A scam is a scam.
My name is Toni Robyn Schwartz and I am the In House Counsel for Security One International, Inc. and I would like to take this opportunity to respond to this blog on behalf of our company as I believe there are several misunderstandings which I would like to clarify.
The first area I would like to address is the area of licensing. While we do operate utilizing in part a door-to-door format, our business does not require a contractor’s license in the State of Hawaii based upon the nature of the wireless systems we install, a solicitor’s license, or an installation permit for the security products we install. Despite the implications in the article, selling security systems door-to-door is perfectly legal! However, our sales representatives fully respect the rights of those individuals who prefer not to purchase an alarm monitoring contract in this manner. We understand that everyone has a personal preference for how he or she wishes to purchase products which may be accommodated via the internet, a shopping mall and/or a door-to-door sales representative. Security One International, Inc. simply offers an additional alternative and convenience to customers who wish to avail themselves of it, but does not seek to impose this upon unwilling individuals.
I would also like to respond to the comments about the fact that we elect to use college students for our sales representatives during the summer season and to allay any concerns that this mitigates our ability to properly service our customers on a year round basis. While our sales representatives may work primarily during the summer months, we maintain a full time staff of technicians year round which enables us to service our entire client base. We find that using college students for our sales force is a win-win situation. It enables these hard working individuals to help achieve the noble goals of earning money toward paying their tuition and other educational expenses as well as supporting their young families while attending school. For the company, we are able to employ an educated, articulate and intelligent sales force which are welcomed by our customers who embrace them as responsive and enthusiastic individuals. When they complete their summer employment, they are able to return to school and focus on their education.
Security Systems provide an invaluable function to millions of people across the country and at Security One International, Inc., we feel privileged to be a part of this industry. There are millions of home owners and business owners all over the country that have these installed security systems and each is extremely grateful for the benefits of deterrence and prevention that these systems have afforded them. The peace of mind that one can derive in preventing loss to one’s person, to a loved one and the protection of one’s home and possessions is truly priceless.
At Security One International, Inc. we are pleased to offer the security system manufactured by General Electric, G.E. to our customers. This is the same company that manufactures the security systems that are installed in airports all across the country. We consider this a great privilege.
The security industry as a whole is certainly not without complaints from dissatisfied customers. Every industry and every business would ideally like to make every customer happy and satisfied. However, this unfortunately is not a realistic possibility in any business and in any industry. I would personally challenge any company to show a completely unblemished record that is devoid of customer complaints or disgruntled employees. However, having said that, I wanted to make clear that at Security One International, Inc., we aspire to act in compliance with the requisite rules and regulations and to respond the needs of our customers in good faith and to the best of our ability.
hopefully this still finds you.. you should educate yourself on Hawaii’s licensing laws before you make such broad claims.
http://hawaii.gov/dcca)/pvl/hrs/hrs_pvl_444.pdf
the above link will take you to Hawaii’s statute 444 which covers the topic of what is required to be licensed, and I believe if you read the whole article you will discover many sections you and the other summer programs are in violation of.. Alarm System Installation is a regulated industry and as such, I can assure you LICENSING IS REQUIRED.
If you start with 444-2 paragraph 3 you will see the following listed under the exemptions –(3)
A person who sells or installs any finished products, materials, or articles of merchandise that are not actually fabricated into and do not become a permanent fixed part of the structure, or to the construction, alteration, improvement, or repair of personal property;
Once the hole is cut into the wall and a screw set into the frame it becomes recognized as a permanant fixture.. (even in Utah the law reads the same, alarms systems are considered permanant improvements)
Shame on you and your company for trying to hide behind the law by twisting and selling your interpretation to benefit yourself and mislead the public again….
Just another sales pitch……
well sir, I am not buying this crap from you——-
It’s a shame that so many of these enterprenuers sacrifice quality customer care and long term stability in order to make a quick buck.
I have worked in the security industry for over 5 years now and have seen all kinds of complaints against security companies for various reasons. It is true that the majority of them use 3rd party services to monitor the home, because these companies such as ADT, Monitronics, SAI, etc… are so good at what they do.
It is important to ask detailed questions regarding the contractual relationship you will have with your Home Security provider so you can make an educated decision. Unfortunately it’s not the companies that are shady as much as the occasional sales rep who employs unethical practices without the companies knowledge. These people are fired very quickly when it comes to a companies attention-Just like any other industry.
Many companies do have their corporate offices on the mainland and have satellite locations to service clients on the Island. Just look at all the corporations that provide excellent services to locals that benefit the economy and well being of locals. Costco, Wal Mart, etc…, Local is good, but does not necessarily mean best.
From an insiders perspective, its unfortunate as I read articles, blogs, and news lines that are twisted and inaccurate that actually mislead consumers. I understand that the intention of articles is to do good, but consumers need to be aware that the old saying “everything you read isn’t true” still stands.
The company that is advertising alarm systems on this very site actually sells their leads off to our company,which maintains a service office in Oahu to service accounts. We don’t shy away from people voicing their experiences, and I appreciate the authors honesty in this article. To clear the air, we do provide free equipment and free installation with a $99 activation fee and 36 month monitoring agreement which includes a lifetime warranty and a lifetime move plan. You will also receive a 10-20% discount on your homeowners insurance for using a service such as ours. You can call into our corporate number anytime to receive this offer, and reps sometimes are only in an area for a week so when they say they are not going to be around tomorrow-they mean it.
Some local companies don’t like that we are competing for business, but the truth is when two businesses compete, the consumer wins.
I wish someone would do an updated story about these scam artists!! I was approached by one just the other day. He said he was with Homeland Security. What a horrible name to use when trying to scam someone. What has to be done to stop these people? It makes me cringe to thing that these people make a living taking advantage of others!
A “marketing director” from the same company just came here to the Enchanted Lake area. The name “Honeywell” was prominently displayed on his binder, but according to Honeywell, they do not sell systems door-to-door. This company is also not licensed to be doing business in Hawaii (although their website says they are in the process of obtaining one).
YOU GET WHAT YOU PAY FOR. There is a group of these guys renting a place next to us and the system they use can be purchased online for less than $200 and installed yourself. There are even cheaper, nice quality, systems that are used by the top alarm companies for little more than $100. Additionally, you can get alarm monitoring for less than $10 a month.
DO NOT BUY INTO THIS “COMPANY” WITHOUT DOING YOUR HOMEWORK. Less than 5 minutes with Google told me more than enough to know to stay away from this scam.
They are placing Monitronics signs in the yard. If you Google this company, Hawaii and college students, you will see several bad stories concerning these guys. Hawaii BBB has a large amount of complaints on them and their practices.
Aloha Ian,
We just had a guy come to our door trying to sell a G.E. Security monitoring program. After a polite conversation and sending him on his way, I remembered reading about security systems on your blog some time back. A quick search and found this thread. Keep up the good work.
Thank you so much for this entry. A Homeland Security salesman came to my Kalihi home this morning, and I was pretty much taken in by his pitch and his VERY pleasant and friendly demeanor. Then I asked about any financial obligations, and he said, “Sorry if I forgot to mention this, but you would be paying only $49.99 per month.” Hmm. What other things were not mentioned? An Internet search brought your blog entry up. THANK YOU.