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Coercion and Harassment at the Door – Energy Marketing in Victoria

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Coercion and Harassment at the Door – Energy Marketing in Victoria Coercion and harassment at the door Consumer experiences with energy direct marketers A report by Consumer Action Law Centre and the Financial & Consumer Rights Council November 2007 Coercion and harassment at the door Consumer Experiences with energy direct marketers Consumer Action Law Centre This paper has been funded by the National Electricity Consumers Advocacy Panel (Advocacy Panel) (90%) and the Consumer Utilities Advocacy Centre (CUAC) (10%) and we would like to take this opportunity to thank them for their support. The views and interpretations expressed in this paper are those of Consumer Action and FCRC and do not represent the views of the Advocacy Panel or CUAC. This paper is © Consumer Action and FCRC 2007. It may be reproduced for non-commercial purposes in whole or in part, so long as the original meaning is retained and Consumer Action and FCRC are acknowledged. Consumer Action Law Centre Ltd Financial & Consumer Rights Council ABN 37 120 046 484 ABN 89 498 543 075 Level 7, 459 Little Collins Street Level 1, 247-257 Flinders Lane Melbourne VIC 3000 Melbourne VIC 3000 Phone: 03 9670 5088 Phone: 03 9663 2000 Fax: 03 9629 6898 Email: [email protected] www.consumeraction.org.au www.fcrc.org.au - ii - Coercion and harassment at the door Consumer Experiences with energy direct marketers Consumer Action Law Centre Acknowledgments Thank you to People First – Total Solutions for their assistance with collecting and collating the case studies which were essential to this project. In addition, thank you to the following financial counselling agencies for the generous gift of their time in sharing the stories of their clients. Anglicare Morwell Anglicare Werribee Ballarat Community Support Broadmeadows Uniting Care CamCare Camberwell Carlton Fitzroy Financial Counselling Service Child & Family Services, Ballarat City of Yarra Financial Counselling Service Council of the Ageing Darebin Family Services Davey House Wonthaggi Dignity Financial Counselling Service Eastern Access Community Health Financial & Consumer Rights Council Financial Counsellors Victoria Gamblers Help Northern Good Shepherd Youth and Family Services Kildonan Child & Family Services Laverton Community Centre Mental Health Legal Centre Moreland Legal Community Centre Port Phillip Community Group Salvation Army (various centres) Springvale CAAB St Luke's Anglicare, Echuca St Vincent de Paul Society Sunbury Community Health Centre - iii - Coercion and harassment at the door Consumer Experiences with energy direct marketers Consumer Action Law Centre Contents ACKNOWLEDGMENTS ......................................................................................................................... III 1. EXECUTIVE SUMMARY ................................................................................................................. 1 Background ...................................................................................................................................... 1 Key findings ...................................................................................................................................... 1 2. OVERVIEW ...................................................................................................................................... 5 Background ...................................................................................................................................... 5 Consumers ....................................................................................................................................... 6 Regulation of energy marketing in Victoria ...................................................................................... 7 Regulation of marketing in other sectors .......................................................................................... 7 Consumer experiences of marketing misconduct ............................................................................ 8 Consumer complaints to EWOV ....................................................................................................... 9 3. REGULATION OF ENERGY MARKETING IN VICTORIA ........................................................... 10 Trade Practices Act and Fair Trading Act ...................................................................................... 11 Energy Retail Code ........................................................................................................................ 13 Marketing Code of Conduct ............................................................................................................ 15 Energy Product Disclosure Guideline............................................................................................. 17 Proposed National Regulation of Marketing ................................................................................... 18 4. CONSUMER EXPERIENCES WITH ENERGY MARKETING ...................................................... 22 Sample and methodology ............................................................................................................... 22 Summary of case studies ............................................................................................................... 23 Key findings .................................................................................................................................... 29 5. CONSUMER COMPLAINTS TO EWOV ....................................................................................... 31 Background .................................................................................................................................... 31 Latest information about complaints ............................................................................................... 32 Systemic problems and enforcement ............................................................................................. 33 Electricity retailers‟ recent cases to EWOV .................................................................................... 34 Commentary ................................................................................................................................... 35 6. SUMMARY OF FINDINGS AND RECOMMENDATIONS ............................................................. 36 Overview ...................................................................................................................................... 36 The problem of direct selling .......................................................................................................... 37 The need for robust regulation ....................................................................................................... 37 Consumer control over who knocks on their door .......................................................................... 38 Commission sales .......................................................................................................................... 39 Explicit informed consent ............................................................................................................... 40 Failure of enforcement ................................................................................................................... 40 Trends identified by financial counselling agencies ....................................................................... 41 Conclusion ...................................................................................................................................... 42 APPENDIX CASE STUDIES ................................................................................................................. 43 - iv - Coercion and harassment at the door Consumer Experiences with energy direct marketers Consumer Action Law Centre 1. Executive Summary Background Since the introduction of full retail contestability in the Victorian energy market, Consumer Action Law Centre (Consumer Action) and the Financial & Consumer Rights Council (FCRC) have received numerous complaints from consumers, financial counsellors and other community support workers about the marketing practices of energy retailers. The Energy and Water Ombudsman Victoria (EWOV) also continues to receive high levels of complaints in relation to marketing practices.1 Complaint levels have largely maintained or increased, despite the existence of consumer protections relating to marketing, both in fair trading and energy regulation. To further understand the nature and types of complaints in relation to energy marketing, and to determine the extent that marketers are not complying with the law, Consumer Action and the FCRC have prepared this case study report detailing a range of consumer experiences with energy direct marketers. This report has been prepared so as to contribute to two regulatory reviews currently being undertaken in the energy market. First, the Australian Energy Market Commission (the AEMC) is undertaking a review of the effectiveness of competition in energy markets in Victoria. The AEMC have expressly asked that stakeholders provide evidence about what is happening in relation to the marketing of energy.2 Secondly, the Ministerial Council on Energy‟s (MCE) Retail Policy Working Group (RPWG) is considering the new national regulatory framework for energy consumer protections, including those that pertain to marketing. This report and its recommendations will be provided to both the AEMC and the RPWG for consideration in their respective reviews. Key findings
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