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AGL apologizes for knocking on your door

AGL (ASX: AGL) released a statement yesterday outlining the final ruling on an Australian Consumer Law case that fined AGL for using door-to-door salespeople that engaged in “conduct that was misleading, deceptive or likely to mislead or deceive.”

The $1.55 million fine is a drop in the bucket compared to the utility’s $115 million after-tax 2012 earnings (and even more so compared to 2011’s $559 million). But the ruling is more than a token tarnish on the corporation’s PR, and General Manager of Retail Energy Stephen Mikkelsen seems to be taking things seriously.

“This case demonstrates how difficult it is to control what salespeople do when they are at people’s premises,” said Mikkelsen in a statement. “Even if a company puts significant training and compliance mechanisms in place, doorknocking remains a risky sales technique.”

According to AGL, its doorknocking is an industry-wide epidemic. In March, AGL stopped using doorknockers altogether and is urging other companies to follow suit.

Foolish takeaway

This most recent announcement has almost no effect on AGL’s financials, but it serves as another example of the importance of a level playing field. Companies can only compete when indiscriminate rules are in place (and are enforced). There’s no beating around the bush that AGL took the heat for this doorknocker disaster, but new industry-wide standards could create a more positive and profitable environment for all utilities.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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