EnergyAustralia cops $1.2 million fine for unlawful door-to-door sales tactics

EnergyAustralia is the latest energy business to come under scrutiny for unlawful door-to-door sales tactics, with the company copping a $1.2 million penalty for making false and misleading representations.

The Federal Court has also fined three of its associated marketing companies a total of $290,000.

EnergyAustralia’s sales representatives were found to have engaged in misleading and deceptive conduct while calling on consumers in their homes to negotiate agreements for the supply of retail electricity by the company.

The sales representatives were found to have breached numerous Unsolicited Consumer Agreement provisions under Australian Consumer Law.

The marketing companies involved were Multiple Stories (trading as Aegis Direct), Australian Sales and Promotions and Sales Marketing and Real Technologies.

Multiple Stories was ordered to pay $200,000, Australian Sales and Promotions was hit with a $50,000 penalty and SMART was fined $40,000.

Legal breaches in relation to door-to-door sales are rife in the energy industry, and last year AGL ended up in court twice for various breaches.

AGL Sale and AGL South Australia were fined a combined $1.555 million in May last year for the use of illegal selling practices, including making false representations to consumers.

In October last year the Australian Competition and Consumer Commission commenced legal action again, when a salesperson acting on behalf of the company breached a ‘do not knock’ sign.

In this case the court found EnergyAustralia representatives had lied and said a there was a mandated electricity rate of tariff consumers were required to be changed and that the consumer’s current retailer were charging them higher than the mandated tariff.

The door-knockers also told consumers EnergyAustralia’s rate had approval or sponsorship from the government and that they were ensuring the consumer was being charged the correct tariff for a government initiative.

Consumers were also told by EnergyAustralia salespeople they would become eligible for additional government entitlements which would reduce their electricity bills if the consumer signed up with EnergyAustralia.

Under ACL, door-to-door salespeople are obliged to advice consumers as to their purpose, tell the consumer they must leave if asked to, leave a premise immediately if there is a ‘do not knock’ sign and provide information in relation to their identity.

TressCox Lawyers partner Alistair Little previously told SmartCompany sales people can only call on consumers between 9am and 6pm Monday to Friday and 9am to 5pm on Saturdays and other obligations include not returning to a house for at least 30 days after knocking and informing customers of a 10 day cooling off period.

Little says to ensure a marketing company is compliant with the law, there needs to be a strict training program in place.

“You can have an arrangement with the company which includes penalty provisions in case they cause you losses or damages in the event consumer laws are broken,” he says.

“If such an arrangement is in place then the contract can be terminated, and payment won’t be made should breaches occur.”

EnergyAustralia has also been ordered to publish correct notices on its website and in the newspaper and maintain compliance programs for sales staff.