Posted Tue 8 Apr 2014, 6:10pm AEST
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Energy Australia has become the latest electricity retailer to be slapped with a substantial fine for its door-to-door sales practices.
The Federal Court has ordered Energy Australia to pay $1.2 million, a decision which follows fines issued to other energy retailers in recent years for similar sales tactics.
The Australian Competition and Consumer Commission (ACCC) took Energy Australia to court last year for conduct that took place in Victoria, Queensland and New South Wales between July 2011 and August 2012.
The court found Energy Australia sales staff made false and misleading representations and engaged in misleading and deceptive conduct while calling on consumers in their homes to negotiate electricity agreements.
"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," ACCC commissioner Sarah Court said.
"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."
During the court case, the ACCC singled out several alleged assertions made by sales agents, including 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 Energy Australia's rate or tariff 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;
- 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 Energy Australia.
The company's general manager of sales and marketing, David Hamilton, says his company worked cooperatively with the ACCC to reach an agreement.
"We take our legal obligations and commitment to providing quality customer service very seriously and we apologise for failing to deliver in these cases," Mr Hamilton said.
"We have already improved our sales compliance processes by improving how we monitor, assess and report on sales, and have increased resources to monitor third-party vendors.
"We also have a compliance program in place and will take further steps to make sure we meet the requirements set out in the orders. This includes ensuring all directors and employees involved with Australian consumer laws are provided yearly training."
Three marketing companies used by Energy Australia to train sales staff have also been ordered to pay fines of $290,000.
Multiple Stories (trading as Aegis Direct) will pay $200,000, while Australian Sales and Promotions will pay $50,000 and Sales Marketing and Real Technologies will pay $40,000.
Energy retailers should 'give up' door-to-door practicesThe Consumer Action Law Centre (CALC) says today's result is a win for consumers.
"Energy Australia is the latest retailer to learn that breaking consumer law will land you in trouble with the regulator," CALC senior campaigner Sarah Wilson said.
"It's an expensive lesson to learn so other retailers would be wise to make sure their houses are in order.
Energy Australia is the latest retailer to learn that breaking consumer law will land you in trouble with the regulator. It's an expensive lesson to learn so other retailers would be wise to make sure their houses are in order.
"Energy contracts are complex products and it's impossible for a customer to make a good decision at the door.
"We think energy retailers should choose more appropriate marketing techniques and give up door-to-door sales all together."
Last year, the Australian Power and Gas Company Limited and Neighbourhood Energy were ordered to pay fines for door-to-door sales practices.
In November, the Federal Court ordered by consent that Australian Power and Gas Company Limited pay a penalty of $1.1 million.
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 May 2013, AGL Sales and AGL South Australia were ordered by consent to pay combined penalties of $1.55 million for false and misleading representations and breaches of the unsolicited consumer agreements provisions.
Marketing company CPM Australia was also ordered to pay $200,000 for its role in the conduct.
Court action against other energy retailers is ongoing.