Consumer Protection Energy Telemarketing

Telephone solicitations, or telemarketing is a way in which some businesses, in many industries, employ direct marketing for goods and services. Many energy and their related companies including, suppliers, retail energy providers and utilities often employ this sales technique in order to convince customers to switch services, change suppliers and more.

Since its inception in the early 1970’s, telemarketing itself has unfortunately gained a rather poor reputation. Most companies who started using this sales technique didn’t (and still don’t) adopt practices that take advantage of their customers. However, telemarketing lends itself quite easily to scams and fraudulent activities. Companies, individuals, and other groups realized that telemarketing allowed them to call up anyone and offer them services. Through these unethical methods, they were (and still are) able to gain access to credit card or other private financial information. To top it all off, the invention of robotic or automatic telemarketing calls increased the public’s frustration with telemarketers in general due to the numerous phone calls made to the same number at all hours of the day.

The Telephone Consumer Protection Act

To help manage and protect customers, the United States regulates telemarking at the federal level. This process is managed and maintained by the Telephone Consumer Protection Act of 1991 (TPCA). Signed by President George H.A. Bush, this act serves as an amendment to the Communications Act of 1934.

Overall, the TCPA controls or regulates telemarketing as well as the automated telephone equipment associated with the practice. There are many general provisions or guidelines associated to this act including,

  • Preventing telemarketers from calling before 8:00 A.M or after 9:00 P.M.
  • All telemarketers must maintain a Do Not Call list. All numbers added to the list must remain there for 5 years.
  • The telemarketer calling must provide their name, telephone number or address, as well as the company or entity on whose behalf the call is being made.
  • Preventing calls made to automated telephone equipment such as an emergency number like 911, or a physician’s office.

If a telemarketer breaks or violates any of the regulations listed on the TCPA, the customer can seek an injunction, sue up to $500 per violation or receive monetary compensation for the loss. In some cases the customer can seek an injunction and sue for compensation. If the violation is willful, the customer can sue up to $1500 for each violation. If the customer has given consent to any of the above, they are likely not eligible for compensation.

In order to increase the public’s confidence in telemarketers, there are many professional associations that have developed strict standards and code of ethics. In addition, many states also have their own regulations based off the TCPA that revolve around things like, Sunday & holiday calls, permission to continue, permission to record and more.

There are several other acts and entities that are related to the TCPA including the Telemarketing Fraud Act and the Consumer Protection Unit.

Telemarketing Fraud Act (TFA)

This act serves to protect customers from deceptive or abusive telemarketers and telemarketing practices and is enforced by the Federal Trade Commission. The act contains four major goals:

  1. To define and put a stop to unethical telemarketing processes and practices.
  2. To prevent telemarketers from invading customer privacy.
  3. To restrict time of day calls can be made.
  4. To disclose the purpose of the call to the consumer immediately, right at the beginning or start of the call.

Consumer Protection Unit (CPU)

This act is more like a group or combination of laws and organizations whose sole responsibility is to protect the rights of consumers within the United States. This includes elements like, competition, fair trade, and accurate marketplace information. All laws were and are designed to prevent fraud and unfair practices within the business and industry as a whole.

Energy and Telemarketing – Customer Protection

In the early 2000’s, many states across America began to implement energy deregulation laws. This required or forced the current energy market to open up to competition. Where utilities once had control over all elements of energy, energy deregulation allowed retail energy providers to form and start offering customers the option to choose who supplied their electricity (and in some cases natural gas).

As a result, the industry within these states has become very competitive. If an electric retail supplier or even utility that offers supply services wants to retain their customers, they need to provide the best services and products.

One of the methods in which these energy suppliers keep in contact with their customers is through telemarketing practices. In some cases, they even use telemarketing to call competitor’s customers to offer them better, and more often, cheaper options. What this means for both energy consumers and the suppliers who participate in these practices, is that they really need to understand and obey both state and federal laws. Otherwise, customers might find themselves signing up with for services that aren’t really real, and suppliers might find themselves getting sued by the very people they were trying to help.

In most cases, it is the customer or consumer who suffers the most from the result of a telemarketing call. Recently, several incidents within the United States have brought up the importance of strictly monitoring telemarketing regulations.

Delaware – Consumer Protection Unit Amendment

House Bill 270 amends the Telemarketing Fraud Act (TFA) to give the Consumer Protection Unit (CPU) the ability to revoke existing registrations, and deny registrations and renewals for telemarketers who participate in any of the illegal activities outlined in the TFA. The act also changed the TFA so that telemarketers are now required to have a certificate of registration from CPU before contacting any customers within the state of Delaware. The certificate must also be renewed every year.

The benefits to this House Bill are that it will generates an increase in supplier compliance. It also generates new obligations for their telemarketers to follow through on.

Customer Protection in Maryland – Blue Pilot Energy

Recently, the Maryland Public Utility Commission found energy supplier, Blue Pilot Energy guilty of violating some regulations in the state related to telemarketing practices. These violations included,

  • Giving incorrect information regarding variable prices – The marketing material used in 2013 and 2014 stated (falsely) that choosing Blue Pilot resulted in lower bills and increased savings.
  • Giving incorrect information about how to cancel a variable rate contract – Based on telemarketing calls, Blue Pilot enrolled customers in contracts without getting a signature (a violation of Maryland law).
  • Advertising that the variable rate would not rise above the Standard Offer Service (for the applicable utility) – Overall, Blue Pilot provided extremely vague pricing information that did not allow customers to fully understand the Terms of Service.
  • Not giving the customer enough information to make an informed decision about electricity services – The company itself did not have the proper processes in place to successfully sell services within the state of Maryland.

The Maryland Public Utility Commission also determined that Blue Pilot also violated several state commission regulations. Their residential contracts were not up to standard with the Maryland Telephone Solicitations Act due to the fact that the company did not have previous relationships with their customers. This was on top of the fact that contracts were also not in writing, nor were they signed.

Blue Pilot’s telemarketing sales scripts did not describe pricing correctly, including many phrases where they guaranteed electricity cost savings such as, “We specialize in reducing the amount of money that you’re spending each month.”, “You don’t have to keep paying these high rates that you’ve been paying for so long.”, and “We’re showing our customers with 25% reduction in their [electricity] costs.”

The combination of so many violations resulted in a penalty of approximately, $140,000 for the company. While Blue Pilot plans to remove itself from the market, the ruling is proof that the rights of the customer are an important component to energy deregulation and market practices as whole.