Energy resellers spanked for misleading & deceptive conduct – again


Posted By on 25/10/15 at 1:40 PM

If you need evidence that the ACCC is focusing on the energy industry, this (and our earlier blogs) should provide it. In spades. In its most recent rulings, the Federal Court has issued fines of $2 million to Origin Energy Electricity Limited (and $325,000 to its marketing agency, SalesForce Australia Pty Ltd), and $1 million to EnergyAustralia Pty Ltd (and $100,000 to its telemarketing company, Bright Choice Australia Pty Ltd), for breaches of the Australian Consumer Law (ACL).

So what did they do?

Origin – dodgy door-to-door sales tactics

The ACCC alleged that Origin and SalesForce (via its sales representatives) breached the ACL via door-to-door sales conducted in New South Wales, Victoria, Queensland and South Australia. In particular, the companies engaged in unconscionable conduct, including pursuing negotiations to sign new contracts:

  • with a consumer who had difficulty in understanding English (incredibly, the sales rep prompted this particular consumer to say ‘yes’ to questions asked by Origin staff during a phone call to confirm a new electricity contract with Origin); and
  • with a consumer who made it clear that she was not the account holder, and was not interested in switching to Origin. The sales rep prompted the consumer to tell Origin over the phone that her husband (the authorised account holder) had signed an agreement when this was not the case. Unsurprisingly, this conduct was also alleged to be coercive.

Justice Katzmann stated in her judgement that, in each case, the sales reps “practised deceptions on the consumers in order to secure their custom”. Her Honour when on to say “They preyed on the vulnerable and ill-informed. The conduct is serious, not only because of the deliberate deceptions and the exploitation of vulnerable consumers, but also because of the location and context in which the conduct occurred: at private homes to which the respondents were not invited”.

In separate incidents, the court found that Origin and SalesForce made false or misleading representations to consumers in stating that:

  • there was a mistake on the consumer’s electricity bill issued by their current electricity supplier;
  • the consumer had to change to Origin because of changes implemented by the government;
  • the consumer would not be charged an exit fee if he changed his electricity supplier to Origin;
  • the sales representative was part of a government-commissioned study investigating complaints about the cost of energy; and
  • the consumer was signing an expression of interest and would not change her electricity retailer unless she contacted Origin.

The court further found that Origin and SalesForce breached a number of the unsolicited consumer agreement provisions of the ACL by:

  • failing to clearly advise consumers that the purpose of their visit was to seek the consumer’s agreement to enter into an electricity contract with Origin;
  • failing to leave the premises immediately on the request of the consumer, including one instance where the consumer had a ‘do not knock’ sticker displayed;
  • calling on consumers outside permitted hours; and
  • failing to inform consumers in writing of their right to terminate their contract within the cooling-off period.

In addition to the fines, the court ordered the publication of corrective notices, maintenance of compliance programs and contribution to ACCC’s costs.

EnergyAustralia – dodgy telemarketing tactics

In this case, EnergyAustralia’s telemarketer (Bright Choice) made false or misleading statements and engaged in misleading or deceptive conduct during unsolicited calls to residents in Victoria, NSW and Queensland during August 2012 and April 2013. In particular, Bright Choice said that the consumer:

  • was not being signed up to an energy agreement;
  • would be sent information, following which they could decide whether they wanted to sign an energy agreement or not; and
  • would not treat the consumer as if they had agreed to enter into a new contract with EnergyAustralia, without further communication from them.

The reality was vastly different – Bright Choice recorded the consumers as having accepted new contracts, and subsequently sent welcome packs from EnergyAustralia.

On top of the fines, the court injuncted Bright Choice from engaging in similar conduct for a period of 5 years and ordered it to establish and maintain a consumer law compliance program for a period of 3 years. Both Bright Choice and Energy Australia were also ordered to pay contributions to the ACCC’s costs.

Continuing focus

Determined to clean up the door-to-door and telephone sales tactics used by energy retailers (and their contractors), this is the 5th proceeding the ACCC has taken regarding illegal sales activities. In fact, this is not the first time EnergyAustralia has been found guilty of such breaches – in April 2014, it was ordered to pay $1.2 million in penalties, and its telemarketing companies (Multiple Stores Pty Ltd, Australian Sales and Promotions Pty Ltd and Sales Marketing and Real Technologies – SMART Pty Ltd) were ordered to pay penalties of $290,000.

AGL, Australian Power & Gas Ltd and Neighbourhood Energy have also had penalties issued against them for similar breaches of the ACL.

AGL, Origin and EnergyAustralia no longer engage in door-to-door sales.

Know your rights

I’ve had a few run-ins with energy resellers over the years, in fact I had one just last week, refusing to leave after I told him to (more than once). I wound up telling him what I do for a living, and hurling sections of the ACL at him as he beat a hasty retreat. No need to be overly polite – tell them to leave and shut the door. Or simply hang up.

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