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Disposition of Pennsylvania Attorney General Complaint Could End Telemarketing Sales in State
The disposition of five complaints brought by the Pennsylvania Attorney General against electric suppliers could end effective retail energy telemarketing in the state if such disposition establishes a precedent for interpretation of the state's Telemarketer Registration Act.
Among other allegations against five retail suppliers (click here for related story today), the AG alleges that the suppliers violated several provisions of the state's Telemarketer Registration Act.
Specifically, the AG alleges that the Telemarketer Registration Act:
• Requires the seller to reduce any sale of goods or services made during such call to a written contract (with specific requirements for what must be disclosed in such written contract), and
• Requires the seller to obtain the consumer's signature on the written contract
However, whether telephonic retail electric sales must meet these two requirements has never been dispositively addressed, in our view.
While there is no debate that the language of the Telemarketer Registration Act does contain the two requirements noted above, the Act's applicability to retail electricity is another matter.
Link to Telemarketer Registration Act text
A threshold issue is that the Telemarketer Registration Act applies to "consumer goods and services," which is defined as, "real or personal property or services used for personal, family or household purposes."
Does retail electricity fall within this definition? The Attorney General has said "Yes", in a 2010 "opinion letter" to then-PUC Chair James Cawley, on the basis that, "Electricity is used in countless aspects and activities of daily life; thus electric generation supply is plainly a 'service used for personal, family and household purposes.'" We are not aware if this opinion has ever been tested in the courts, though the case against the AG's interpretation is not strong.
Link to 2010 AG Opinion Letter on EGS Telemarketing
A more salient issue is Telemarketer Registration Act's numerous exceptions to the written contract and signature requirement.
First, the Telemarketer Registration Act provides that a written contract is not required if, "The contractual sale is regulated under other laws of this Commonwealth."
Are telephonic retail electricity sales regulated under other "laws" of Pennsylvania? We think this is a debatable case, particularly if the term "laws" includes administrative regulations, and not only statutes.
Notably, the AG's 2010 opinion letter did not address the applicability of the written and signed contract requirement for electric sales conducted through telemarketing.
However, the AG, based on the allegations in the new complaints against the five retail suppliers, appears to now be arguing that the suppliers were required to comply with the Telemarketer Registration Act's requirement to reduce the telephonic contracts to writing and obtain a signature. As noted in our related story today (click here for related story today), it is unclear whether the PUC will consider complaints under the Telemarketer Registration Act's to be within its jurisdiction, meaning this matter may be kicked to the courts.
A narrower exception in the Telemarketer Registration Act is that a written contract is not required if, "The transaction is a result of the consumer examining an advertisement, sample, brochure or catalog of the telemarketer or telemarketing business which contains the name, address and telephone number of the telemarketer or telemarketing business, a description of the goods or services and any limitations or restrictions that apply to the offer."
Most true cold calls will not meet this definition, but as was the case in Maryland when restructuring started (under a very differently composed Commission), regulators may wink and nod past this issue, by assuming that retail electric marketing is so prevalent, that any customer will have previously seen an EGS's offer that they are called about on the phone (this idea has never been floated in Pennsylvania to our knowledge, however).
As an aside not relevant to the at-issue complaints, the Telemarketer Registration Act requires all telemarketers to register with the Attorney General. The AG's 2010 letter exempts electric generation suppliers from this requirement (including non-supplier EGSs such as broker/marketers) because they are licensed by the PUC; however, any agents not licensed by the PUC as an EGS must register with the AG.
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June 23, 2014
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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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