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.