Energy providers zapped by misleading claims


Posted By on 25/10/15 at 1:36 PM

Continuing its commitment to focus on the industry, the ACCC has been busy prosecuting energy resellers for making misleading claims.

Origin Energy – misleading representations regarding discounts

Origin trumpeted to South Australian consumers that signing up to a DailySaver energy plan would lead to discounts of up to 16% for electricity usage, and up to 12% for gas usage. This information was published on its website and in welcome packs sent to new customers.

The devil in the detail was that the rates charged under the DailySaver plan were actually higher than those under its standard retail contracts. Applying the discount to the higher rate effectively resulted in a lower discount.

The ACCC took action against Origin, claiming it made misleading representations to its South Australian customers regarding the level of discount they would receive. The Federal Court agreed, fining Origin (and two of its subsidiaries) a total of $325,000, and ordering the publication of a corrective notice in local South Australian paper, The Advertiser. The court also ordered Origin to pay a portion of the ACCC’s costs in relation to the action.

In late 2014, the ACCC also successfully prosecuted AGL (also in South Australia) for making misleading representations regarding discounts on its energy plans. In that case, AGL increased energy rates during the term of its contract with consumers who signed up to a particular energy plan. In making the increase, AGL stated that consumers would continue to enjoy the same level of discount, when this was not the case. Penalties in this matter will be determined at a later date.

Simply Energy – dodgy door-to-door sales tactics

Simply Energy door to door sales reps are alleged to have told Victorian consumers that there was a problem with their electricity supply (when this was not the case), in order to induce them to switch providers.

The ACCC issued two infringement notices, attaching penalties totalling $20,400. It’s worth noting that the voluntary payment of the infringement notices does not constitute a finding of contravention of the Australian Consumer Law. They are a tool used by the ACCC, when it has reasonable grounds to believe a contravention of the ACL has taken place.

Still, there’s no smoke without fire.

The upshot

Consumers should be delighted to know that the ACCC takes compliance with the ACL very seriously, and is focused on ensuring energy resellers (long the scourge of many consumers) comply with their obligations under consumer laws.

Naomi Stephens Paralegal

Naomi is a paralegal in the Competition Law & Regulatory Compliance team, focusing on marketing activations, advertising review and trade promotions compliance.  She joined KHQ after having spent... Read More