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SHOCK: Initial Decision Would Require Signed, Written Contract For Retail Energy Telesales in Pennsylvania


Use of Exception to Wet Signature Requirement Denied


July 8, 2016

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

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Copyright 2010-16 Energy Choice Matters. If you wish to share this story, please email or post the website link; unauthorized copying, retransmission, or republication prohibited.

An initial decision from two Pennsylvania ALJs concerning a complaint brought by the Office of Consumer Advocate and Attorney General against Blue Pilot Energy (click here for related story today) would find that failing to obtain a customer signature on a written contract after a cold call telesale would violate the state's Telemarketer Registration Act and therefore also violate the PUC's regulations

Although the body of the ALJs' initial decision is a bit less explicit, a conclusion of law would unequivocally state that, "When Blue Pilot enrolled customers via telemarketing, Blue Pilot failed to obtain customers’ signatures agreeing to enrollment in violation of 52 Pa.Code §111.10(a)(1) [which requires compliance with the Telemarketer Registration Act]."

The initial decision is not final and may be appealed by Blue Pilot

Most of the contracts at issue in the complaints were the result of cold calling telesales, and were authorized via TPV.

The AG and OCA alleged that the Telemarketer Registration Act (TRA) requires the supplier to reduce any sale of goods or services made during a call to a written contract (with specific requirements for what must be disclosed in such written contract), and requires the supplier to obtain the consumer's signature on the written contract

EnergyChoiceMatters.com first explored (click here) the question of the applicability of the TRA to retail suppliers when the complaint was filed in 2014

Specifically the Telemarketer Registration Act, at 73 P.S. Section 2245(a)(7), makes it illegal to fail to reduce any sale of goods or services made during a telemarketing call to a written contract and makes it illegal to fail to obtain the consumer's signature on the written contract

All telesales must reduce the sale to writing, with such material sent to the customer. However, within the TRA, there are certain exceptions to the requirement to obtain the customer's signature on the written contract sent to the customer.

Certain of these exceptions are inapplicable to either cold calling (such as for calls in response to an advertisement or calls following a sales pitch at a store) or the electric industry, but relevant here is the exception that, "A signed, written contract is not needed if ... [t]he contractual sale is regulated under other laws of this Commonwealth."

To our knowledge, the question of whether a retail energy sale is regulated, "under other laws of this Commonwealth," and therefore does not require a wet signature, has never been definitively answered (an AG advisory opinion on supplier registration under the TRA did not address the issue, and the initial decision likewise does not cite any other precedent).

Therefore, the initial decision addresses this issue for the first time, and would find that failing to obtain the customer's signature agreeing to enrollment after a telemarketing sale is in violation of 52 Pa.Code §111.10(a)(1), which requires compliance with the provision of the TRA

Though never explicit in the ALJs' discussion, the ALJs are rejecting the argument that retail energy telesales do not require a signed written contract because they are regulated under other laws of this Commonwealth and qualify for such exception

The discussion provided by the ALJs, which is not specific to the question of the wet signature and any exceptions (more focus is placed on the requirement to send the written materials after a telesale, to which there is no exception) is as follows:

"Section 111.10(c) of the Commission’s regulations and Section 2245(a)(7) of the TRA require Blue Pilot to reduce any sale of goods or services made during a telemarketing call to a written contract and send that document to the consumer and obtain his or her signature. 52 Pa.Code § 111.10(c); 73 P.S. § 2245(a)(7). Blue Pilot, during the telemarketing sales call or after, did not routinely obtain or seek the customer’s actual signature on any document to confirm enrollment for 34 consumers whose testimonies were admitted into the record in this proceeding. Blue Pilot also failed to provide a disclosure statement to 17 consumers whose testimonies were admitted into the record in this proceeding. Moreover, Blue Pilot provided a disclosure statement long after the telemarketing sales call and enrollment to 9 consumers whose testimonies were admitted into the record in this proceeding. The record establishes that Blue Pilot can provide no evidence that it provided these documents to consumers who enrolled through a telemarketing call in a timely manner. This is a direct violation of Section 111.10(c) of the Commission’s regulations and Section 2245(a)(7) of the TRA."

The ALJs also would find that, "The Company’s business practices are not in accordance with the requirements of the TRA and thus, constitute violations of 52 Pa.Code § 111.10(a) [which requires compliance with the TRA]."

Other than referencing Blue Pilot's defense that a signed contract is not required since retail energy sales are regulated under other laws of the Commonwealth, the ALJs do not address the applicability of this exception. So this is not a case where specific actions by Blue Pilot were not in accordance with the exception (and that the exception could be preserved for the broader market); the "other laws" exception to the wet signature requirement was denied in toto

The initial decision would conclude that, "Joint Complainants have shown that Blue Pilot has violated the Commission’s regulation at 52 Pa.Code § 111.10 by failing to comply with the TRA and failing to provide disclosure statements or written agreements to residential customers. With these failings, Blue Pilot has also violated the Commission’s regulations at Sections 54.43(f) and 111.12(d)(1), 52 Pa.Code §§ 54.43(f) and 111.12(d)(1), which prohibit misleading and deceptive conduct."

Docket C-2014-2427655

Link to Telemarketer Registration Act text

Related:

Initial Decision Would "Permanently Revoke" Retail Supplier's License; Would Fine Retail Supplier $2.5 Million and Order $2.4 Million in Refunds

ALJs Would Rule That Failure For Supplier To Inform Customer "How [Variable] Price Would Be Calculated" Is Deceptive

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