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Draft Texas Rule: Rescission Period Would Not Start Until Customer "Confirms" Receipt of Notice Regarding Enrollment, For This Sales Channel

October 24, 2016

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

Staff of the Public Utility of Texas have filed a draft proposal for publication to allow retail electric providers to enroll customers solicited through door-to-door marketing through a portable electronic device that would include a new provision that, for such sales, the rescission period shall not begin until the REP receives the customer's confirmation of a notice regarding enrollment

Specifically, Staff's draft proposal provides that, for door-to-door enrollments via portable electronic device, "After enrollment, the REP or aggregator shall send a confirmation by first class mail, email, or other agreed upon means of communication to the applicant of the applicant's request to select the REP."

"If the confirmation is sent by any means other than first class mail, the confirmation must allow for the applicant to confirm receipt and the three-day right of rescission period shall not begin until the REP receives the applicant's confirmation," Staff's draft proposal provides.

Staff's draft further provides that such confirmation shall include a, "clear and conspicuous notice in the body of the confirmation of the customer's three-day right of rescission required by the Federal Trade Commission's Trade Regulation Rule Concerning Cooling Off Period for Sales Made at Homes or Certain Other Locations (16 C.F.R. Part 429)."

"The notice shall state that the customer may exercise their right to rescission within three federal business days after receiving the terms of service without penalty and offer the customer the option of exercising this right by toll-free number, email, Internet website, facsimile transmission, or regular mail. The notice shall be accessible to the applicant without need to open an attachment or link to any other document," Staff's draft provides, however, as noted in the language above, the three-day rescission period would not start, for confirmation notices not sent via first class mail, until the REP receives the applicant's confirmation that they received the confirmation notice.

The confirmation notice would also be required to include the terms of service document, EFL, PDS, if applicable, and Your Rights as a Customer disclosure.

Note that the absence of a customer's confirmation that they received the enrollment confirmation information would not prevent the enrollment from being executed; it would only delay the start of the rescission period.

In other words, if the REP sends the enrollment confirmation notice by email or text, the three-day right of rescission shall not begin until the REP receives the applicant's confirmation of receipt of such notice.

Taken to its extreme, such provision could allow the REP to begin serving the account, and serve the account until the agreed upon expiration of the contract, only for the customer, having never confirmed receipt of the enrollment notice, to exercise their right of rescission (not termination, but rescission) right before contract expiration, seeking to recover all amounts paid to the REP under the now rescinded and invalid contract (though other case law may not support any such scheme by a customer who has acquiesced to service without complaint for such period until an 11th hour rescission, the point is that the substantive rules would apparently permit such behavior under the draft)

Practically speaking, unless having the customer confirm receipt of the confirmation information is made part of the sales process (an extra step before the agent leaves the premises, which may be the intent), customers who elect to receive the confirmation information by means other than first class mail may have a low rate of confirming receipt of the information, because confirming receipt of the information isn't required to complete the sale, and the customer may view the email (or text) as for informational and record-keeping purposes only, despite any prodding and language used by the REP in the confirmation communication encouraging the customer to confirm receipt of the documents.

This risk that the customer may never confirm receipt of their emailed/texted enrollment confirmation may push REPs to send enrollment confirmations via first class mail, since under first class mail, there is no risk that the rescission period is open for an unknown, prolonged period of time, as under first class mail, there is no requirement for the customer to confirm receipt of the confirmation of the enrollment

Specifically, under the Staff draft, "[t]he REP or aggregator may assume that any delivery of the confirmation deposited first class within the United States Postal service will be received within three federal business days."

See Related Story Today For More Details On Proposed PED Enrollment Rules: Texas Staff Propose Draft Rule Allowing REPs To Use Portable Electronic Device For Door-to-Door Enrollments -- Would Require REPs To Warn Customers of Potential Termination Fees From Current REP

Project 45625

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