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PSC Approves $35,000 Settlement With Retail Supplier

January 13, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Michigan PSC approved a settlement with Direct Energy Services, LLC (DES) to resolve an investigation into alleged slamming of natural gas customers, which includes, among other provisions, a fine of $35,000

As previously reported (click here), the investigation was initiated after a single complaint prompted a review of the enrollments by a certain agent, with an initial review by Direct Energy reporting that 20 of the reviewed sales contained suspicious activity that included: (1) agent impersonation; (2) same voice; and (3) authorizing names not matching the name of the person on the phone. As the result of an initial investigation, Direct Energy previously refunded all of the complainant’s charges to the account and cancelled their service from Direct Energy

A subsequent report by Staff of the Michigan Agency for Energy alleged that 59 of the agent's 282 sales had suspicious activity tied to the enrollments. Of the 59 customers, 29 of them received gas service from DES, the other 30 customers never flowed or started gas service.

Michigan Agency for Energy alleged, "that the majority of affected customers used a Voice Over Internet Protocol (VOIP) to confirm their enrollment. It appears the agent in question manipulated the VOIP system and was able to impersonate the customer as multiple TPV’s for different customers seemed to have the same voice agreeing to the DES enrollment for gas service."

In a filing, Direct Energy said that it, "suspects that the agent may have potentially fraudulently set up false phone numbers and then posed as the customer using these phone numbers to complete the third-party verification process during enrollment, thus rendering all VOIP enrollments by this agent suspect."

In response to the subsequent report, Direct Energy Services agreed to refund these customers the difference between the DES rate and their local utility’s rates for the period of enrollment. It was also agreed that an additional refund of $10 would be provided to cover any potential switching fees, along with an additional $50 goodwill gesture credit which would be applied to the refund check.

In addition to the fine, under the settlement Direct Energy Services, LLC agrees to continue a voluntary moratorium on Michigan door-to-door sales that began on November 1, 2016, that shall continue for 90 days. Direct Energy Services, LLC will review and revise door-to-door training materials during this time.

The settlement also provides that Direct Energy Services, LLC shall present to Michigan Agency for Energy, "technologies that enhance customer identification and consent, and [a] secure enrollment processes," by March 31, 2017

Specifically, regarding the VOIP issue, Direct Energy Services, LLC has agreed to use a subscription service intended to allow DES to match phone numbers to addresses in an effort to avoid this same issue in the future.

Direct Energy provided the following statement to EnergyChoiceMatters.com:

"We’re resolving a matter from March 2016 in which one agent used a tactic that violated our customer enrollment policies and procedures. We have voluntarily suspended our door-to-door activity in Michigan and are working with the MPSC to review and revise our agent training to ensure all agents follow our company’s policies and procedures. We are also working with the MAE and the MPSC to explore new technologies to enhance our agent training and enrollment process. We have already implemented one such technology which will improve the customer experience and prevent similar tactics in the future, and we look forward to commencing our door-to-door sales again in Michigan soon."

Case U-18121

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