Third-party electricity supplier fined $2 million for marketing violations

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Third-party electricity provider Discount Power has been fined $2 million and banned from operating in Connecticut for three years after regulators discovered its sales agents regularly deceived and lied to customers to persuade them to sign contracts with the company.

The Public Utilities Regulatory Authority released a scathing report this month outlining “serious and systemic violations” of state marketing laws by Discount Power in 2018 and 2019. PURA – the state’s utilities regulator – said He reviewed appeals from dozens of agents representing Discount Power and appealed included numerous violations of the law.

PURA said there were instances where Discount reps clearly preyed on confused elderly people.

In one case that PURA described as “deeply disturbing, even sickening”, an elderly woman repeatedly asked if a call from an agent seeking to enroll her in a contract with Discount Power was for “electric gas”.

The agent made no attempt to clarify and kept trying to enroll the woman, even though she told the agent directly, “I don’t enroll in your company,” PURA found. The woman refused to register three times before the Discount agent became aggressive, according to PURA.

“I told you ten times and you forgot again… It doesn’t change anything,” the agent said.

After being repeatedly yelled at and lied to, the woman finally completed the registration process, PURA found.

“It’s hard to imagine a call more representative of the type of marketing Connecticut customers should never be subjected to,” PURA said.

“Savings” misrepresented

Connecticut electric customers are permitted to purchase their electric power from a third party, replacing the power tariffs on their Eversource or United Illuminating bill with tariffs.

The offers may seem attractive to customers frustrated with some of the highest electricity bills in the country, and in some cases they may save the customer money – or provide other benefits like buying more electricity from renewable resources.

But in general, third-party providers end up costing customers significantly more than Eversource’s standard service rate, PURA found. And last year, 22 different third-party providers admitted to charging customers higher rates than they advertised, resulting in a $9.4 million settlement.

One of PURA’s claims against Discount was that it presented its rates as “savings” when talking to potential customers. Discount representatives told customers they were offering a “lower price” without even asking what rate customers were already paying, PURA said.

Throughout the first half of 2018, Discount offered a rate 0.02 cents per kilowatt-hour lower than the standard service rate charged by Eversource and United Illuminating, but higher than several other third-party providers. And in the second half of the year, it offered a tariff more than half a cent per kWh higher than the standard tariff, according to PURA.

In some cases, PURA found, Discount reps outright told customers that Eversource’s standard rate was higher than it actually was. PURA ordered Discount Power to pay compensation to each registered customer in 2018 and 2019 for any amount paid beyond the standard service rate.

Discount defended its rates, saying its contracts with terms longer than 6 months protected customers from standard rate changes that occur every 6 months. In some cases, standard rates go down, but they also go up frequently, such as when Eversource’s standard service rate increased nearly 40% in January, the company said. Discount said about 2,000 of its 5,700 customers in Connecticut are now paying less than they would be under the standard rate.

“Nothing will change”

PURA said it was clear from reviewing call recordings that customers were coming to the end of calls never realizing they were switching providers. PURA said that in several instances, representatives lied or tried to confuse the customer into not understanding that they were accepting a contract with the company. Discount reps frequently told customers that “nothing would change” as a result of their call.

PURA has also found that agents representing Discount regularly mislead customers about what they are accepting. All of the “win-back” calls PURA has reviewed — where the company is trying to bring a former customer back — have followed a similar pattern:

The agent tells the customer that he no longer receives “price protections” or “benefits” from Discount, and the agent says that he wants to reinstate the customer. The agent then re-registers the customer with Discount, without indicating that the customer is switching providers or explaining “price protection” or “benefits,” PURA said.

In one instance, a customer who was already wary of third-party vendors asked directly if the call was from Eversource, and the rep gave a misleading answer.

“Isn’t it Eversource?” Is it another company? asked the customer. “Because I had [a third party supplier] before and I really got screwed.

“Keep in mind that you’re not switching Eversource at all,” the Discount rep said.

The representative was actually trying to get the customer to switch providers from Eversource to Discount, which violated marketing laws by helping the customer believe the call was from Eversource. PURA said.

“Rogue Agents”

Discount Power told PURA that the violations were the result of “rogue agents” working for contractors the company had hired for its telemarketing, and were not evidence of systematic failure on the part of the company. ‘business.

The company – which has the ability to appeal the ruling to the Superior Court – said it shouldn’t be penalized so harshly since it fired the agents or entire companies that violated its standards and shut down all ” outbound telemarketing” in Connecticut in 2019. Remise said that when he discovered someone was listed due to “violent behavior” by one of his agents, he allowed customers to terminate their contracts without costs.

“The company hopes that the Authority will recognize that NOV’s $2 million fine, wrongful surrender requirement and license suspension are not only disproportionate, but could also have the effect of putting DPI, a company of Connecticut with Connecticut employees, bankrupt,” he told PURA in a filing.

PURA said it was “hard to overemphasize” how Discount’s marketing methods confused customers into thinking they had to contract with a supplier. Agents opened each call with a stream of ‘benefits’ or ‘price protection’ information, how the person called was already a Discount customer but their benefits ‘expired’ and asking to ‘verify’ the customer’s information to re-register it. .

“Discount agents barely breathe between sentences, let alone give the customer a chance to understand what’s going on,” PURA said. “Discount seems to capitalize on this rapid succession of events, assuming, often correctly, that the customer is so confused they won’t ask questions.”

Discount’s attempts to pin the blame on “rogue” telemarketers did not convince PURA, which said it found enough evidence that these issues were happening repeatedly, among dozens of agents and multiple sub-agents. contractors, to penalize the company.

“Had Discount properly trained and monitored its agents, the myriad violations documented here likely would have been avoided or far less excessive,” PURA said.

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