USG&E Promised Savings but Overcharged and Switched Providers
New York
Attorney General Letitia James today announced she has secured $1.95 million in
restitution from energy service company U.S. Gas & Electric, Inc.
(USG&E) for engaging in deceptive business practices against tens of
thousands of New York consumers. USG&E’s dishonest actions resulted in New
York consumers paying more for energy services — in many cases hundreds of
dollars each year.
“U.S. Gas
& Electric took advantage of tens of thousands of innocent New Yorkers,
fleecing them out of millions of dollars,” said Attorney General Letitia James.
“Not only are we securing restitution for New Yorkers who were ripped off, but
we’re continuing our efforts to root out fraud and deceit in the energy
services industry. This settlement should send a clear message to the energy
industry that we will fight to hold accountable companies that defraud New
Yorkers out of their hard-earned money.”
When
purchasing gas and electricity, consumers have two choices: 1) buy directly
from a utility company or 2) contract the purchase through an energy service
company (ESCO) that purchases energy on the open market and then sells that
energy to consumers. Because ESCOs buy the electricity and gas they supply to
their customers from the same sources as the utility companies, there is no
qualitative difference between the electricity and gas supplied by ESCOs and
utilities. The USG&E investigation revealed that USG&E was an ESCO that
engaged in numerous false, misleading, and deceptive practices that caused
consumers to pay more for their gas and electricity. In particular, the
investigation found that USG&E:
Lured
consumers with false and misleading promises of savings, when in fact many
consumers saw their gas and electricity bills go up after switching to
USG&E;
Signed up
consumers with USG&E without the consumers’ consent;
Misrepresented
itself as representing utilities;
Violated
federal and state Do Not Call laws; and
Provided
inadequate customer service.
The
settlement announced today requires USG&E to pay $1,950,000 as restitution
to consumers. The settlement also requires USG&E to take measures to
prevent deceptive practices in the future, including: 1) ensuring the adequate
training of customer service representatives, 2) recording telephone
communications between customers and sales representatives that result in a
sale, 3) refraining from employing misleading marketing and advertising
practices that imply savings, 4) regularly monitoring customer service calls,
and 5) appropriate disciplinary procedures for violations of the law.
New Yorkers
who bought electricity from USG&E may be eligible for a refund if they were
subject to certain deceptive practices. New York consumers can submit a
complaint online or call (800) 771-7755 and speak to a consumer frauds
representative for more information. Today’s settlement with USG&E is part
of the Office of the New York Attorney General’s long-standing, ongoing
investigation into ESCOs. Investigations into this industry have resulted in
ESCOs paying millions of dollars in restitution and penalties. In the last five
years, the Office of the New York Attorney General has recovered over $4
million in settlements from four ESCOs.
Consumers
can protect themselves from unscrupulous ESCOs by remembering the following
tips:
You do not
have to choose an ESCO to supply your gas or electricity. You may choose to use
your utility company as your direct supplier.
If you
receive an offer for energy services, make sure you understand whether the
offer is from your utility company or an ESCO.
Make sure
you understand whether an ESCO contract involves an early termination fee and,
if so, what that fee may be. Ensure you also know the commitment of your
contract.
Before
accepting any offer, ask the ESCO to show you how its rates have compared with
your utility’s rates during each month in the past year. This can help you
judge how competitive the ESCO’s rates may be in the future.
Remember
that you have the right to cancel an ESCO contract, with no obligation, within
three days if you change your mind.
If you are
uncomfortable with how a marketer behaves, end the conversation with a request
to look over their offer in writing so you can get back to them when you have
made a decision free of any pressure.
If you
receive a notice that your service is being switched to an ESCO and you did not
authorize the switch, contact the utility and the ESCO immediately to tell them
to halt the switch. If you are unable to get an ESCO switch cancelled, contact
the New York Public Service Commission at 1-888-697-7728.
The U.S. Gas
& Electric investigation was handled by Assistant Attorneys General
Christopher L. McCall and Kate Matuschak of the Consumer Frauds and Protection
Bureau, under the supervision of Deputy Bureau Chief Laura J. Levine and Bureau
Chief Jane M. Azia. The Consumer Frauds and Protection Bureau is part of the
Division of Economic Justice, which is led by Chief Deputy Attorney General
Christopher D’Angelo.
