Regulator Imposes $750,000 Civil Penalty On Retail Supplier, In Final Order
July 17, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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The Connecticut PURA issued a final order imposing a civil penalty in the amount of $750,000 on Spark Energy, LLC as PURA concluded that a pre-recorded telemarketing message used by a subcontractor of an agent of Spark Energy, LLC violated certain statutes
Specifically, PURA found that, "Spark has failed to comply with the provisions of Conn. Gen. Stat. §§ 16-245(g)(2), 16-254o(h)(1), 16-245o(h)(2)(A), 16-245o(h)(3), 16-245o(h)(4), 16-245o(j) and 42-110b by utilizing a pre-recorded message that (1) never identified that identifies Spark as the entity conducting the telemarketing, (2) represented to customers that the solicitation call is from an electric distribution company, (3) never explained the purpose of the sales call, which was to have customers enroll in a supply contract with Spark, (4) misstated the electric distribution company’s current charges; and not directly training its third-party agents."
"These violations were directly caused by Spark’s intentional inaction and negligent failure to monitor, audit and oversee that its marketing agents’ activities complied with the legal requirements set forth in the aforementioned statutes," the final order states
The final decision states that, "Through the complaints filed with the Authority’s Consumer Affairs Unit, the Authority determined that calls had been made on Spark’s behalf using a pre-recorded message ... which stated the following: 'Hello and thank you for being a valued customer of Eversource Energy formerly Connecticut Light and Power. The following is an important update regarding your account. Starting this month, all current customers that have not missed a payment in the past six months may now be eligible for a discount up to 15% on their monthly bill. If you would like to check your eligibility for this discount, simply press 1 on your phone now. If you are not a current customer, press nine to update our records and you will not be called again.'"
The final decision states that Spark acknowledged that a subcontractor (hereafter, "non-contracted subcontractor") of one of Spark's contracted agents (hereafter, "agent") used an automated message when contacting potential customers. Spark did not authorize its agent to use the non-contracted subcontractor
The final decision states, "In these calls, Spark’s representatives implied to potential customers that they were calling on behalf of The Connecticut Light and Power d/b/a Eversource (CL&P or Eversource)."
The final decision states, "According to information provided by Spark in response to interrogatories, 151,892 of such violative telemarketing messages were made on Spark’s behalf."
Conn. Gen. Stat. §16-245o(h)(2)(A) states that, "For any sale or solicitation, including from any person representing such electrical supplier, aggregator or agent of an electric supplier or aggregator (i) identify the person and the electric general services company or companies the person represents; (ii) provide a statement that the person does not represent an electric distribution company; (iii) explain the purpose of the solicitation; and (iv) explain all rates, fees, variable charges and terms and conditions for the services provided."
The final decision states, "The pre-recorded message violates this statute. First, the message never identifies that it is from Spark as required by Conn. Gen. Stat. § 16-245o(h)(2)(A)(i). Second, not only does the message never indicate that it is not from an electric distribution company (EDC), on the contrary, it is worded to appear as if it is from an EDC, which violates Conn. Gen. Stat. § 16-245o(h)(2)(A)(ii). Third, the message violates Conn. Gen. Stat. § 16-245o(h)(2)(A)(iii); as the message appears to emanate from Eversource, it does not explain the purpose of the solicitation, which was to have customers enroll in a supply contract with Spark."
The final decision states, "Likewise, the message violates Conn. Gen. Stat. § 16-245o(h)(3), which prohibits marketing that confuses a customer as to a bill’s total or the EDCs charges. Here, the message states that a customer could receive a discount of 15% on their “monthly bill,” but it does not disclose the EDC’s charges to which a customer would compare this purported savings, let alone the portion of the bill to which the discount would apply."
The final decision states, "Because the message misleads customers into believing it is from an EDC and confuses customers as to the EDC charges and purported savings, it is deceptive and violates Conn. Gen. Stat. §§ 16-245o(h)(4), 16-245o(j), and 42-110b."
The proposed decision would find that Spark’s pre-recorded message meets the precendtial criteria for determining a Connecticut Unfair Trade Practices Act (CUTPA) violation. "First, the message was likely to mislead customers into thinking they were interacting with Eversource because the message refers to them being Eversource customers and never mentions Spark or that the purpose of the call was for the customer to contract with a supplier. Second, it would have been reasonable for a customer to interpret the message as being from Eversource given its script, the fact that it mentions only Eversource, and the fact that it never mentions Spark. Third, the misleading representation was material in this case because it misrepresented the party with whom the customer was contracting. Had the message revealed itself as being from Spark, customers not wishing to change their electric supplier would not have engaged with the message. Instead, Spark tricked customers into engaging by causing them to think that they were receiving a call from their EDC," the final decision states
While Spark argued that it is not responsible for the non-contracted subcontractor's actions because Spark's agent was not allowed to employ a subcontractor, the Authority in the final decision, "finds that Spark cannot shed its responsibility for the actions of its third-party agent and subcontractor."
The final order notes that, "Conn. Gen. Stat. § 16-245o(h)(1) provides, in pertinent part, that '[a]ny third-party agent who contracts with or is otherwise compensated by an electric supplier to sell electric generation services shall be a legal agent of the electric supplier.' This is a remedial statute meant to protect Connecticut consumers and should be interpreted in a manner consistent with its purpose."
The final order states, "Furthermore, it was incumbent upon Spark, as part of its responsibility to the Connecticut citizens to which it was marketing, to monitor [the agent] to ensure it acted within the terms of its contract."
The $750,000 fine consists of: $740,000 for what the final order described as the "illegal" recorded messages, which PURA said is a significant reduction of the potential $150 million penalty ($1000 x 151,892 violations), and $10,000 for what the order states is, "Spark’s repeated failure to directly train third-party marketers, violations that caused the very problems addressed in this decision."
The final decision also provides that, from August 2, 2019 through August 2, 2020, Spark shall maintain complete audio recordings of the entire transaction for all marketing calls made by it or on its behalf by any third party. Within two weeks of any request by the Authority, Spark shall produce any requested audio recordings and written transcripts thereof.
Furthermore, the order directs that, upon the Authority’s request, Spark will provide the Authority with the dates, times, and locations in which it will conduct any form of marketing, including but not limited to telesales, door-to-door, and in-person marketing. The Authority reserves the right to observe and audit such marketing. The Authority will establish other auditing procedures for other forms of marketing in which Spark may engage, including but not limited to, obtaining and reviewing the content of any electronic marketing materials published through internet websites, emails, or texts, or any hard copy marketing materials used internally by sales persons, such as sales scripts, and/or distributed to prospective customers via mail delivery or hand-to-hand delivery.