EnergyAustralia Ordered By Consent To Pay $1.2 Million For Unlawful Sales Tactics

Thursday 24 April 2014 @ 8.34 a.m. | Trade & Commerce

The Federal Court has ordered by consent that EnergyAustralia Pty Ltd (EnergyAustralia) pay a penalty of $1.2 million for unlawful door-to-door selling practices in proceedings brought by the Australian Competition and Consumer Commission (ACCC).

The Court declared that EnergyAustralia, through the conduct of certain sales representatives acting on its behalf, made false and misleading representations and engaged in misleading and deceptive conduct while calling on consumers at their homes to negotiate agreements for the supply of retail electricity by EnergyAustralia.

The Court also declared that EnergyAustralia, by conduct of the sales representatives, breached various Unsolicited Consumer Agreement provisions of the Australian Consumer Law, which are designed to protect the rights of consumers in door-to-door selling transactions.

By consent, the Court also imposed total penalties of $290,000 against three marketing companies EnergyAustralia had used to engage and train the sales representatives involved in the illegal sales conduct. Specifically, the penalties imposed against each marketing company are:

  • Multiple Stories Pty Ltd (trading as Aegis Direct) to pay $200,000;
  • Australian Sales and Promotions Pty Ltd to pay $50,000; and
  • Sales Marketing and Real Technologies – SMART Pty Ltd to pay $40,000.

Background

In November 2013, the Federal Court ordered by consent that Australian Power & Gas Company Limited (APG) pay a penalty of $1.1 million for illegal door-to-door selling practices.

In September 2013, the ACCC instituted proceedings against Origin Energy Electricity Limited, Origin Energy Retail Limited and marketing company SalesForce Australia Pty Ltd in relation to their door-to-door selling practices. The ACCC alleges Origin and SalesForce engaged in unconscionable conduct, undue harassment and/or coercion, and made false or misleading representations to consumers when calling at their homes. These proceedings are continuing.

In May 2013, AGL Sales Pty Ltd and AGL South Australia Pty Ltd were ordered by consent to pay combined penalties of $1.555 million for false and misleading representations and breaches of the unsolicited consumer agreements provisions. Marketing company, CPM Australia Pty Ltd, was also ordered to pay $200,000 for its role in the conduct.

In September 2012, the Federal Court ordered by consent Neighbourhood Energy and its former marketing company, Australian Green Credits Pty Ltd, to pay total penalties of $1 million for illegal door-to-door selling practices.

In referring to the current Unsolicited Consumer Agreement breaches, Justice Middleton stated that:

“… these standards are intended to limit consumers’ exposure to inconvenience, invasion of privacy and the risk of loss or damage when they make a decision to purchase goods or services on their doorstep without being advised clearly and upfront that the salesperson is there to sell them something. They can ask the salesperson to leave if they are not interested”.

The ACCC Commissioner Sarah Court said:

“This is another important outcome in the ACCC’s focus on door-to-door sales tactics in the energy industry and follows other significant penalties ordered against some of the largest energy retailers in Australia … The message to the industry is clear – energy companies must act now to ensure that their sales agents and representatives comply with the Australian Consumer Law and do not engage in illegal sales practices.”

The false and misleading representations made to consumers by the sales representatives acting on behalf of EnergyAustralia included that:

  • there was a mandated electricity rate or tariff that consumers were required to be charged, and that the consumer’s current retailer was charging at higher than this mandated electricity rate or tariff;
  • the sales representative and EnergyAustralia’s rate or tarrif had approval from, or sponsorship or affiliation with, the government;
  • the sales representative was attending the consumer’s premises for the purpose of a government initiative to make sure energy companies were charging the correct rate or tariff; and
  • the consumer would become eligible for additional government entitlements that would reduce their electricity bills if the customer changed from their current retail electricity supplier to EnergyAustralia.

The breaches of the Unsolicited Consumer Agreement provisions included failure by certain sales representatives to:

  • clearly advise the consumer that their purpose was to seek the consumer’s agreement to a supply of retail electricity by EnergyAustralia;
  • advise the consumer that they were obliged to leave the premises immediately if the consumer requested they do so;
  • in one instance, leave a premises immediately on the request of the consumer, in circumstances where the consumer had a “do not knock” sign displayed; and
  • provide information relating to their identity.

The Court also ordered EnergyAustralia to publish corrective website and newspaper notices. Further, the Court ordered that EnergyAustralia and all the marketing companies involved establish and maintain trade practices compliance programs.

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Sources:

ACCC Media Release MR 75/14

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