Competitive Electric Suppliers Preying on the Elderly

Just as in past years, in 2019 AmSA will continue our efforts of working hard to help keep those hard earned dollars in the pockets of our senior citizens. 

We have taken notice of alarming tactics that are being utilized by competitive electric suppliers in several states including Illinois, Massachusetts and New York. What started out as a deregulation plan to help electricity rates come down has turned into a nightmare for many electricity customers. Sadly, many of the competitive electric suppliers have been targeting the elderly, low income and minority residents with aggressive sales schemes. They are making false promises of lower electric bills, but those promises didn't come true for many residents.

According to a recent comprehensive, 2-year report prepared by Massachusetts Attorney General Maura Healey, Massachusetts electricity customers who switched to a competitive electric supplier paid $176.8 million more than if they would have stayed with their utility company. After seeing consumers being taken advantage of, Attorney General Healey stepped in to protect consumers from these scams and put a stop to the predatory practices being used by some of these companies.

What is even more troubling, Jennifer Bosco, staff attorney for the National Consumer Law Center in Boston said, “The competitive market for electricity was supposed to lower prices for households in Massachusetts, but for years has done the opposite.” Ms Bosco added, “Millions of dollars in overcharges have been picked from the pockets of Massachusetts families as the result of this failed experiment.” The aggressive door to door tactics of the competitive electric suppliers were so egregious, the Quincy Police Department had to join in and warn the public. Many elders, minorities and low income residents lost an average of $231.00 while some lost over $500.00. These Massachusetts residents could have used their money to buy groceries or medicine, but instead they were scammed out of it by competitive energy suppliers.

Some of the Massachusetts suppliers who have cheated customers have been held accountable. Attorney General Healey forced Viridian Energy into paying a hefty $5 million fine for deceptive marketing and sales tactics. Just Energy agreed to pay $4 million to 40,000 customers for deceptive marketing, entering consumers into agreements without their consent and charging costly termination fees.

In the state of Illinois, Attorney General Lisa Madigan filed suit against alternative electric suppliers doing business in Illinois for using the same unscrupulous tactics to take advantage of the elderly, low income and minorities in Massachusetts. The Chicago Sun Times reported the suit alleges thousands of Illinois customers have been ripped off by high pressure sales schemes who paid $2.5 million more than they would have if stayed with their utility, ComEd.

More than 1.8 million Illinois residential customers bought into the sales pitch and made the switch to an alternative electricity supplier instead of continuing to buy power from their local utility supplier. Just in the last 3 years, the switch has cost small businesses and residential customers over $400 million than their previous electrical utility company would have charged.
The idea was hatched years ago to give consumers more options in a competitive marketplace, but it hasn't worked out that way. In fact, Attorney General Magidan indicated the alternative energy supplier industry is rife with bad actors and had to create a special task force in her office just to field all of the complaints. Major Energy was listed as the fourth alternative electric supplier to have an action filed against them in Illinois for deceptive door to door tactics and telemarketing sales practices. Attorney General Magidan didn't hold any punches saying there are a wealth of bad companies in the alternative energy arena and warned customers, “You are almost never going to save money by switching.”

In addition to Massachusetts and Illinois, New York has had their share of problems too. In New York, residential customers were given the opportunity to purchase their electricity over 20 years ago, and since that time, the consumer loss could be in the billions based on the New York Public Service Commission 30 month analysis. The customer service in New York appears to be similar to other states when it comes to alternative energy suppliers. In an article published in pressconnects, it was reported that independent electricity suppliers are not only overcharging, but some of the worst actors are engaging in outright fraud. From 2014-2016, the New York attorney general's office fielded a staggering 14,000 complaints about marketing practices. 

When dealing with the elderly population, some of the tactics being undertaken by Energy Plus can be very difficult to comprehend. Understandably so, words like “Risk Free” and “Market Rate” can be confusing. Additionally, Energy Plus offered cash-back, enrollment bonuses and rewards, but didn't adequately disclose the customer would have to wait 2 months to 1 year after they paid Energy Plus to receive the benefit.

Another company, HIKO engaged in “slamming” tactics. This scam is when service is transferred without receiving proper authorization after sales representatives obtained account numbers through deceitful efforts.

It is good to see the state attorney general's stepping in to help protect our elderly population and others from the aggressive door to door sales tactics, telemarketing and deceptive business practices some of the alternative electric supplier companies are using to get customers on board. American Senior Alliance typically supports a free market system where our seniors have the opportunity to purchase the best product at the best price. However, we are greatly concerned about the questionable marketing and predatory practices being used by some of the electrical suppliers forcing our elderly population into signing unjust agreements they will regret for the rest of their life.


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