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Shady Marketing Practices in the Energy Industry

While energy deregulation aims to help people afford the electricity they use, the fact that it opens the electricity market up to competition can sometimes encourage the wrong kinds of people.

Energy deregulation allows organizations known as electricity providers (and their affiliates) to offer supply related energy services to energy consumers.  The vast majority of these organizations and the people working for them are legit and offer many different types of products and services that are reasonable, fair, and are advertised with honesty and transparency.

However, there are individuals out there who try to take advantage of consumers. They run marketing scams that put hundreds if not thousands of dollars into their own pockets, instead of having the best interests of the consumer at heart.

For the consumers out there who don’t know about or completely understand their options or energy deregulation laws/regulations it can be easy to fall prey to marketing scams.  The danger of falling into these kinds of traps is that consumers can lose out on hundreds if not thousands of dollars over time.

Door-to-Door & Phone Marketing

The major problem in identifying a scam lies in the fact that all energy services companies and organizations will sometimes go door-to-door or call you on the phone. The reason for this is because it’s often the best way to tell you about their new products and plans, or to gain new customers.

Door-to-Door sales often work well for electricity providers because many people don’t even know that they have the option to choose. They continue to receive services from “the same folks they always have,” and may not know they have the ability to shop around for a better deal. Marketing door-to-door not only helps educate the consumer, but can also lead to increased sales.

However, this is also where many problems can arise.  Scam artists will use different techniques to try and sell to you. In many cases, they will apply a lot of pressure to make you feel like you need to make a decision quickly.  The good news though is that there are several things you can look out for that will help you to identify when an agent or affiliate of a company is attempting to get you to sign up for a scam.

Some of these signs can include:

Acting on Your Behalf

Many self appointed, “electricity provider representatives” will try to convince you that they will act on your behalf. This means that they will pick the electricity provider that they think best suits your needs, in addition to setting up your account, etc.  This type of scam is generally run either though door-to-door sales or over the phone.

The biggest problem with this is that the individual is usually not associated to any electricity provider at all. The individual will then attempt to receive money from an electricity provider for referring the customer. Alternatively, the individual will target a specific neighborhood, and then try to sell a bundle of services at a higher price so that they can keep the difference.

Slamming

This technique is something that scammers will use after a consumer has signed up for electricity services. They will go ahead and switch the consumer from one electricity provider to another without the consumer’s consent. Often, the consumer is switched for a higher rate, all so that the individual can benefit from the transfer.

This practice is illegal for agents associated with an electricity provider. Therefore, if it happens to you, or the individual suggests that they be given permission to make those decisions on your behalf, it’s a guaranteed scam.

Following up on a Notification

Many individuals will go door-to-door, presenting themselves as a representative of a particular electricity provider. They will tell you that they sent a notification, every thirty days. While this is a practice that many electricity provider do when they follow up on payments, it is designed to make you feel like you are in trouble.

Quite often, the individual can get money right at the door, simply because they make the consumer uncomfortable (and through other pushy tactics). This is very much a scam and will leave you with less cash in your pocket.

Specific Consumer Targets

Unfortunately, individuals trying to scam energy consumers tend to prey on either the elderly or those in lower income brackets. Scams targeting these demographic groups tend to focus on discounts and deals over anything else. The problem is, the deals or bundles offered end up costing these consumers much more. In many cases, the rates are much higher than they can reasonably afford.

There are many deregulated states that offer programs and assistance for both elderly and low income consumers. It is best to contact these programs directly for more information.

Other

Unfortunately, it’s difficult to keep up with marketing scams. Individuals change tactics all the time, coming up with new and inventive ways to benefit from others. Therefore, if you are ever approached by an agent and they don’t take no for an answer, or you feel incredibly uncomfortable, chances are, the individual is trying to scam you.

Don’t agree to anything, and tell them that you need some time to think about it, or that you will contact them at a later date.  If they aren’t willing to provide legitimate contact information, that should be a huge red flag.

Establish Stricter Laws

One of the ways in which deregulated states try to combat and protect electricity consumers from scams is to create stricter laws for agents of electricity providers.  Public Utility Commissions (PUCs) in these states take this job very seriously.

In general, some of the rules and regulations that PUCs across America are working hard to implement include:

I’ve Been Scammed! What do I do?

One important thing to keep in mind is that if someone offers you a deal that seems to good to be true — it is likely a scam. If you do however, find yourself in the middle of a marketing scam, there are several things that you can do including:

  1. If you are not currently with an electricity provider, call your utility for help.
  2. If you are currently with an electricity provider, call them for assistance.
  3. Cancel any contract you signed with the individual immediately.
  4. Contact your PUC to file a complaint. They will contact your provider for more information.

Again, the vast majority of organizations and individuals in the energy industry are honest and hardworking people.  At Electric Choice specifically, we always strive to be as open and transparent as possible about rates and fees associated with electricity plans.  We’ve been in business for over a decade and it’s from offering great service around our great energy products.