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Does Newly Proposed Broad Definition of "In-Person" Sales Ensnare Multi-Level Marketing, Friends & Family Referral Retail Energy Sales?

January 20, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

As noted in our related story today (click here) concerning the proposed double verification of in-person retail electric sales in Illinois (LOA plus TPV), a draft first notice order from two Illinois ALJs would broadly define "in-person solicitation," raising the question of whether in-person solicitation disclosure requirements and marketing rules apply to multi-level or network marketing

Specifically, the draft first notice would define "in-person solicitation" as meaning, "any sale initiated or conducted where the RES [retail electric supplier] agent is physically present with the customer."

Discussion in the accompanying draft first notice order, however, appears to exclude "friends and family" recommendations made socially (particularly those made in connection with referral programs) from the disclosure requirements, on the basis that such sales would later be covered by disclosure requirements for other enrollment methods (online or telephone call). However, other more "formal" pitches to friends and family that directly result in an enrollment appear to be within the bounds of the new draft rules

Specifically, in addressing proposals for carved-out rules to address multi-level marketing (which the draft order declines to do), the draft first notice order includes the following discussion:

"The Commission declines to adopt ICEA’s [Illinois Competitive Energy Association] proposed definition for 'in-person solicitation' or 'multi-level marketing' because the Commission declines to limit Section 412.120 to door-to-door sales, multi-level marketing, or stationary kiosks. Rather, 'in-person solicitation' should cover all face-to-face interactions. The Commission disagrees that this level of complexity should be added to a Section which can easily be adapted for all in-person solicitations. ICEA also suggests that Staff’s expansion of door-to-door would appear to regulate dinner conversation, because it would now cover friends and family that recommend RES service to other friends and family in order to receive gift cards, bonuses, or discounts on their bills. The Commission disagrees that this sort of conversation would fall under the ambit of Section 412.120 because there is no enrollment. Rather, a potential customer would still need to sign up with a RES online or call the RES directly. Therefore, the sale will actually be regulated by Sections 412.150 and 412.140, respectively. ICEA’s concern regarding the Commission’s authority over these kinds of friends and family interactions is unfounded; the Commission agrees it has none."

Elsewhere the draft first notice order says that friends and family sales pitches should be subject to other in-person requirements, namely, the requirement that the sales agent must leave when asked to do so.

The rules under the draft first notice order broadly require that the, "RES agent shall leave the premises at the customer's, owner's or occupant's request."

In discussing this requirement, the draft first notice order states that the Commission declines to limit this requirement to door-to-door sales.

"If a friend or neighbor is a RES agent and is soliciting his social network, these requirements should still apply. There is no reason that a RES agent should not honor a request to leave during any in-person solicitation," the draft order states

Docket 15-0512

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