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ACCC slaps AP&G for consumer protection violations

On 11 September the ACCC released an announcement that it is bringing a Federal Court case against Australian Power & Gas Company (ASX: AGK) over alleged illegal door-to-door selling practices.

Proceedings have been filed concerning sales representatives who, acting on behalf of the company, are accused of making false or misleading statements while calling on consumers at their homes. The complaints received concerned salespeople selling to the elderly or people who don’t speak English well using high-pressure sales tactics.

In addition, these salespeople promised discounts on energy bills that did not exist, and led consumers to believe they were affiliated with or had the approval from their current energy retailer or the government.

Under new rules introduced into the Unsolicited Consumer Agreement within the Australian Consumer Law, a salesperson must inform the consumer upon meeting them that if requested to leave, they must do so immediately, and not return to that residence for at least 30 days. They must also provide identification of themselves and their connection with the company they represent.

Already three other proceedings were previously filed since the legislative changes. The company Neighbourhood Energy was fined $1 million in September 2012 for related illegal practices, and proceedings filed in May 2013 against EnergyAustralia for false and misleading conduct are still continuing.

The third proceeding was brought against two subsidiaries of AGL Energy (ASX: AGK), and in May it was ordered to pay a total $1.55 million in penalties on similar grounds as well as breaches of the Unsolicited Consumer Agreement provisions. Another $200,000 was ordered to be paid by the marketing company that the two subsidiaries used for their role in the conduct.

Foolish takeaway

Recent changes in deregulation concerning the separation of energy utility companies and retail energy service providers have opened the market to private companies to negotiate with consumers on which energy supplier is nominated as their service provider.

Now the utility companies have to compete potentially for each and every customer in an area that perhaps they would have locked in under previous regulation. What may have originally been introduced to promote competition has caused power companies to aggressively market consumers to protect their base, and has resulted in a rise of abuse and illegal practices.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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