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.
