Regulator Issues Notice of Probable Violation To Retail Supplier, Alleges TPV Which Includes Multiple Customer Requests To Repeat Question Is Invalid (Allegedly Shows Customer Confusion)

Delegated Commissioner Alleges Supplier, "Altered Telephone Recordings"

April 24, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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The Delegated Commissioner of the Massachusetts Department of Public Utilities ('Department') issued an attached Notice of Probable Violation ('NOPV') to Mega Energy of New England, LLC for the purpose of initiating a formal proceeding into the telemarketing practices of Mega Energy of New England, LLC ('Mega Energy' or 'Respondent').

The NOPV and the conclusions from the Delegated Commissioner do not represent final agency action.

Mega Energy was directed to respond to the NOPV and may request a hearing.

Mega Energy issued the following statement concerning the matter: "Mega cannot comment on pending regulatory or legal proceedings. We do not condone improper sales practices under any circumstances and are committed to offering our services in full compliance with all laws and regulations. We look forward to working with the DPU to address the issues raised in the Notice."

The NOPV states, "During the period April 2019 through February 2020, the Department’s Consumer Division received complaints from fifteen electricity consumers in the Commonwealth regarding telemarketing calls they received from Mega Energy."

Noting information provided by Mega in response to DPU Staff inquiries, the Delegated Commissioner said that, "my review of these materials leads me to conclude that it is probable that Mega Energy has engaged in marketing activities that violate the applicable provisions of G.L. c. 164, §§ 1A through 1F and 220 CMR 11.00."

The Delegated Commissioner said, citing four TPV recordings provided by Mega, that, "As demonstrated by the four TPV recordings outlined [in the NOPV], Mega Energy did not obtain the appropriate affirmative choice from the complainants."

The Delegated Commissioner said that the activities addressed in the NOPV, "are related to (1) Mega Energy’s TPV practices, (2) misleading and deceptive information provided through the Mega Energy’s telemarketing calls, and (3) altering the recordings of Mega Energy telemarketing calls."

"My review of the complaints received by the Consumer Division and the recordings provided by Mega Energy lead me to conclude that Mega Energy (1) engaged in deceptive telemarketing sales calls, (2) failed to obtain customers’ affirmative choice to take supply service, and (3) altered telephone recordings. Considered separately, each violation constitutes egregious misconduct -- taken together, the violations represent a pattern of such misconduct," the Delegated Commissioner said

"For each activity, I propose sanctions that the Department should impose on Mega Energy," the Delegated Commissioner said (proposed sanctions noted below)

Third Party Verification

Of most note to the retail market is that the Delegated Commissioner finds that TPVs in which the customer requests that a question be repeated multiple times does not represent a valid authorization for enrollment, because the multiple requests for a question to be repeated show that the customer did not understand the product's terms

The NOPV said that a recording of the TPV of a complainant included the following exchange:

Automated TPV Agent: Here are the terms and conditions of the offer from Mega Energy. You have signed up for a fixed rate of 13.9 cents for a term of 12 months. You have three days from the time you receive written confirmation of the agreement to change your mind concerning this offer. You can call 1 (855) 810-6342 to decline the offer.

If you understand and accept the terms and conditions of our offer, please state yes followed by the pound key. (Beep)

Complainant #2: Repeat.

Automated TPV Agent: Here are the terms and conditions of the offer from Mega Energy. You have signed up for a fixed rate of 13.9 cents for a term of 12 months. You have three days from the time you receive written confirmation of the agreement to change your mind concerning this offer. You can call 1 (855) 810-6342 to decline the offer.

If you understand and accept the terms and conditions of our offer please state yes followed by the pound key. (Beep)

Complainant #2: Repeat.

Automated TPV Agent: Here are the terms and conditions of the offer from Mega Energy. You have signed up for a fixed rate of 13.9 cents for a term of 12 months. You have three days from the time you receive written confirmation of the agreement to change your mind concerning this offer. You can call 1 (855) 810-6342 to decline the offer.

If you understand and accept the terms and conditions of our offer please state yes followed by the pound key. (Beep)

Complainant #2: Repeat.

Automated TPV Agent: Here are the terms and conditions of the offer from Mega Energy. You have signed up for a fixed rate of 13.9 cents for a term of 12 months. You have three days from the time you receive written confirmation of the agreement to change your mind concerning this offer. You can call 1 (855) 810-6342 to decline the offer.

If you understand and accept the terms and conditions of our offer please state yes followed by the pound key. (Beep)

Complainant #2: Yes.

The Delegated Commissioner said, "while it may be reasonable and appropriate for a TPV agent (whether live or automated) to repeat a question once (in order to ensure that a non-responsive answer was not the result of a lack of hearing the question clearly), it is unacceptable for the agent to continually repeat the question until the customer responds with the correct answer."

The Delegated Commissioner said, "The multiple 'Repeat' responses of Complainant #2 clearly indicate that the complainant did not understand the terms and conditions of the product. The repetition of the same question until Complainant #2 provided the correct answer represents an attempt on the part of the TPV agent to 'badger' Complainant #2 into providing her affirmative authorization to switch to Mega Energy. Such behavior does not adhere to the Commonwealth’s customer authorization requirements and should have resulted in a rejection of the enrollment. See 220 CMR 11.05(4) (requiring affirmative choice)."

The Delegated Commissioner also cited examples of other non-confirming TPVs. In the TPV excerpted below, the Delegated Commissioner finds that the customer answered "No" to a question repeatedly until finally answering "Yes" in what the Delegated Commissioner alleges is an effort to "badger" the customer

Automated TPV Agent: Do you understand that there will be an early termination fee of $50 if you cancel this contract after the rescission period and before the end of contract unless the reason is exempted in the terms of service.

Please state yes or no followed by the pound key. (Beep)

Complainant #1: No. They told me I will not pay.

Automated TPV Agent: Do you understand that there will be an early termination fee of $50 if you cancel this contract after the rescission period and before the end of contract unless the reason is exempted in the terms of service.

Please state yes or no followed by the pound key. (Beep)

Complainant #1: No, I will not pay. Not they told me.

Automated TPV Agent: Do you understand that there will be an early termination fee of $50 if you cancel this contract after the rescission period and before the end of contract unless the reason is exempted in the terms of service.

Please state yes or no followed by the pound key. (Beep)

Complainant #1: Yes. Oh my god.

(Exh. DC-Complainant #1, Tr. at 3-4).

"While it may be reasonable and appropriate for a TPV agent (whether live or automated) to repeat a question once (in order to ensure that an incorrect answer was not the result of a lack of hearing the question clearly), it is unacceptable for the agent to continually repeat the question until the customer provides the correct answer. The multiple 'No' responses of Complainant #1 clearly indicate that the complainant did not understand that the product included an early termination fee. Indeed, the repetition of the same question until Complainant #1 provided the correct answer represents an attempt on the part of the TPV agent to 'badger' Complainant #1 into providing her affirmative authorization to switch to Mega Energy. Such behavior does not adhere to the Commonwealth’s customer authorization requirements and should have resulted in a rejection of the enrollment. See 220 CMR 11.05(4) (requiring affirmative choice)," the Delegated Commissioner said

The Delegated Commissioner also cited two instances in which TPV transcripts indicated that, after the Automated TPV Agent began the TPV, the Live Telemarketing Agent told the customer, that, "I’ll press the buttons. You do not have to press any button," or, "Make sure state your answer after the beep sound and don’t press any key. I will press it for you."

"It is unacceptable for a telemarketing agent to participate in the TPV process in the manner described above. When the agent pressed the telephone button, the agent deprived the customer of his ability to give affirmative authorization to switch to Mega Energy. 220 CMR 11.05(4)(c). This action should have resulted in a rejection of the enrollment. The telemarketing agent’s active participation in the TPV process also violates both the spirit and letter of the Commonwealth’s rules regarding TPV procedures, which contemplate the TPV to be performed by 'an independent third party' engaging with the customer, without influence or interference by a telemarketing agent. 220 CMR 11.05(4)(c)," the Delegated Commissioner said

"[T]he participation of the telemarketing agent in the TPV call represents a failure to obtain the customer’s authorization and violates both the spirit and letter of the Commonwealth’s rules regarding TPV procedures. This should have resulted in a rejection of the enrollment," the Delegated Commissioner said

The Delegated Commissioner said, "The TPV practices described above are unlikely to be isolated instances limited to these four complainants. Instead, it is likely that the instances are examples of a common practice on the part of Mega Energy. These practices abuse the role of TPV calls. While each of the described incidents represents egregious misconduct, a widespread practice would represent a pattern of not only misconduct, but a pattern of egregious misconduct."

The Delegated Commissioner said, "To determine the extent of this TPV practice, the Department should direct Mega Energy to submit to the Department recordings of every TPV call conducted on its behalf since January 2018. Further, the Department should require Mega Energy to fund an independent audit of those TPV calls; the selection of the auditor and the audit itself should be conducted under the Department’s supervision. For each TPV call that resulted in an enrollment that should have been rejected and where the customer’s rate is above the basic service price (based on criteria set forth by the Department), the Department should require Mega Energy to refund to the affected customer the difference between what it paid to Mega Energy over the term of the applicable contract and what the customer would have paid had the customer been on basic service. See G.L. c. 164, § 1F(8)(c); 220 CMR 11.07(3)(b) (absent evidence of customer’s affirmative choice, Department will require supplier to refund billing differences and expenses). In addition, the Department should assess Mega Energy a penalty up to $25,000 per violation (i.e., invalid TPV call), not to exceed $5,000,000 in total, and take appropriate licensure action. In determining the amount of the penalty and scope of licensure action, the Department should consider, among other things, the good faith and cooperation of Mega Energy in undertaking the requested audit. G.L. c. 164, § 1F(7); 220 CMR 11.07(4)(c)(2); D.P.U. 16-156-A at 30-31."

Alleged Misleading And Deceptive Information And Alleged Altering Of Recorded Calls

The Delegated Commissioner cited alleged misleading and deceptive information provided to customers, as alleged in customer complaints

The Delegated Commissioner cited allegations that customers were promised savings which did not align with the rate in the TPV, that customers were told their delivery or customer charges would go away, or that Mega misrepresented itself as the sole authorized supplier for a municipal aggregation

The Delegated Commissioner said, "On January 31, 2020, Complainant #5 filed a complaint with the Department’s Consumer Division alleging that he received a telemarketing call from Mega Energy that included deceptive and misleading information (Exh. DC-Complainant #5, Complaint). Complainant #5 alleges that the call began with a prerecorded message that stated that he was overbilled for electric service in the past and would receive a rebate check along with a 30 percent discount on his future electric bills (Exh. DC-Complainant #5, Complaint). After pressing '1' on his phone, Complainant #5 alleges that he was switched to a live telemarketing agent who repeated the claim regarding the 30 percent discount and identified a product price of 13.9 cents per kilowatt-hour ('kWh') (Exh. DC-Complainant #5, Complaint). Complainant #5 alleges that he told the telemarketing agent that he was currently paying 11.3 cents per kWh, and asked the agent how, despite paying a higher price for supply, he would be saving 30 percent on his bill (Exh. DC-Complainant #5, Complaint). Complainant #5 states that the agent responded that the delivery charge would go away (Exh. DC-Complainant #5, Complaint). Complainant #5 alleges that, later in the call, the telemarketing agent stated that the delivery charge would not go away, but that he would nonetheless save 30 percent (Exh. DC-Complainant #5, Complaint)."

The Delegated Commissioner said, "The Consumer Division directed Mega Energy to provide a recording of the telemarketing and TPV call. The recording of the telemarketing call includes none of the misleading and deceptive information alleged by Complainant #5 (Exh. DC-Complainant #5, Tr.). As such, either the allegations of Complainant #5 are false, or the recording of the telemarketing call provided by Mega Energy is different from the actual call (i.e., Mega Energy provided an altered recording of the call). After being provided with a copy of the telemarketing sales call recording, Complainant #5 submitted a letter (1) confirming the information that he provided to the Consumer Division in his complaint, and (2) alleging that the recording was an edited version of the call in which he participated (Exh. DC-Complainant #5, Letter). Two other factors related to the call support Complainant #5’s contention."

The Delegated Commissioner said, "First, a review of the telemarketing call portion of the recording shows that, at no time during the recording did the telemarketing agent provide any information regarding the product price or the contract term (Exh. DC-Complainant #5, Tr. at 2-7). However, as shown in the excerpt below of the TPV call, Complainant #5 answered affirmatively to the TPV agent’s questions regarding these product characteristics."

The Delegated Commissioner said, "Second, information provided by Complainant #5 indicates that the duration of the call with Mega Energy was 20 minutes (Exh. DC-Complainant #5, Phone Screenshot), while the duration of recording provided by Mega Energy (which includes the telemarketing and TPV call), was less than eight minutes. Both these discrepancies suggest that Mega Energy provided the Department with an altered recording of the telemarketing call."

The Delegated Commissioner said, "There is also a discrepancy between the content of the telemarketing call and the TPV call. As shown below, there is a significant difference between the price identified by the telemarketing agent and the price identified by the TPV agent."

The Delegated Commissioner alleged that a transcript included the following details:

Telemarketing Agent: Okay? When you choose Mega Energy you will start receiving 8.5 cents rate for kWh, kilowatt hour.

(Exh. DC-Complainant #6, Tr. at 4).

[...]

Automated TPV Agent: Here are the terms and conditions of the offer from Mega Energy. You have signed up for a fixed rate of 13.9 cents for a term of 12 months. You have three days from the time you receive written confirmation of the agreement to change your mind concerning this offer. You can call 1 (855) 810-6342 to decline the offer.

The Delegated Commissioner said, "On February 5, 2020, Complainant #7 filed a complaint with the Department’s Consumer Division alleging that he received a telemarketing call from Mega Energy during which the telemarketing agent stated that if Complainant #7 switched to Mega Energy he would no longer have to pay the customer charge, which currently appears on his bill."

The Delegated Commissioner said, "On January 22, 2020, Complainant #8 filed a complaint with the Department’s Consumer Division alleging that Mega Energy misrepresented itself as being the sole provider of electricity for the municipal aggregation program implemented by the Town of Natick, Massachusetts (Exh. DC-Complainant #8, Complaint). The Consumer Division contacted Mega Energy, which acknowledged that its telemarketers had called Natick residents. The Department does not have a copy of the recording of this telemarketing call. However, because there is little motivation for consumers to file false complaints with the Department, it is reasonable to conclude that there is at least some validity to the complaint."

The Delegated Commissioner said, "To determine the extent of any such misconduct, the Department should direct Mega Energy to submit to the Department recordings of every telemarketing call conducted on its behalf since January 2018. Further, the Department should require Mega Energy to fund an independent audit of those telemarketing calls; the selection of the auditor and the audit itself should be conducted under the Department’s supervision. For each telemarketing call that resulted in an enrollment that should have been rejected and where the customer’s rate is above basic service (based on criteria set forth by the Department), the Department should require Mega Energy to refund to the affected customer the difference between what it paid to Mega Energy over the term of the applicable contract and what the customer would have paid had the customer been on basic service. See G.L. c. 164, § 1F(8)(c); 220 CMR 11.07(3)(b) (absent evidence of customer’s affirmative choice, Department will require supplier to refund billing differences and expenses). In addition, the Department should assess Mega Energy a penalty up to $25,000 per violation, (i.e., misleading/deceptive telemarketing call), not to exceed $5,000,000 in total, and take appropriate licensure action. In determining the amount of the penalty and scope of the licensure action, the Department should consider, among other things, the good faith and cooperation of Mega Energy in undertaking the requested audit. G.L. c. 164, § 1F(7); 220 CMR 11.07(4)(c)(2); D.P.U. 16-156-A at 30-31."

The Delegated Commissioner said, "It would be troubling in the extreme if Mega Energy provided the Department’s Consumer Division with altered telemarketing call recordings. Because of the extraordinary nature of this issue, the Department should require Mega Energy to fund the services of an expert to determine whether the telemarketing call recordings discussed above have been altered; the selection of the expert and the examination of the recordings should be conducted under the Department’s supervision. For each incident where a recording provided by Mega Energy is found to have been altered, the Department should assess Mega Energy a penalty up to $25,000 per violation, not to exceed $5,000,000 in total, and take appropriate licensure action, including, but not limited to, a suspension or revocation of Mega Energy’s license. 220 CMR 11.07(4)(c)(1), (2)."

The Delegated Commissioner further said as follows:

While the Department does not have the authority to enforce laws outside its jurisdiction, one or more legally significant bad acts may be cause for the Department to investigate a competitive supplier. Conduct that is prohibited by statute or regulation would likely constitute conduct that may constitute egregious misconduct or a pattern of misconduct under 220 CMR 11.07(4)(c). As discussed in Section IV, below, the Delegated Commissioner has reason to believe that the Respondent’s conduct is prohibited or proscribed under the following statutes and regulations.

1. Providing Altered Telemarketing Recordings to the Department

G.L. c. 268, § 6: Willfully making a false report (i.e., providing altered telemarketing recordings) to the Department is punishable by fine, imprisonment, or both.

2. Telemarketing Prohibitions and Required Disclosures

G.L. c. 159C, § 3: A telephone solicitor shall not make or cause to be made an unsolicited telephonic sales call to a consumer by use of a recorded message device.

G.L. c. 159C, § 5A(a): A telephone solicitor shall disclose all of the following information within the first minute of a telephonic sales call and before requesting, accepting or arranging for payment by a consumer: (i) that the purpose of the telephone call is to make a sale or solicit funds; (ii) the correct name of the telemarketing company that employs the individual telemarketer who is making the call; (iii) the correct name of the ultimate seller whose goods or services are being offered by means of the telemarketing call; and (iv) a complete and accurate description of the goods or services being offered including, but not limited to, the retail market value of the goods or services.

G.L. c. 159C, § 5A(b): The telemarketer shall provide all of the following information before requesting, accepting or arranging for payment by a consumer: (i) the cost to the consumer of the goods or services that are the subject of the telemarketing sales call including, but not limited to, any applicable tax, shipping and handling fees; (ii) any restrictions, limitations or conditions attached to purchasing the goods or services; (iii) the complete terms of any applicable refund, return, cancellation, exchange or repurchase policies; (iv) any material aspect of an investment opportunity being offered including, but not limited to, the price of the land or other investment, the location of the investment and the fact that an investor may lose some or all of their original investment.

47 C.F.R. § 64.1200(a)(2) and (3): With limited exceptions (which do not apply here), no person may initiate a telephone call to a residential line using an artificial or prerecorded voice to deliver a message without the prior written consent of the called party. And even then, the message must begin by clearly identifying the business, individual, or other entity that is responsible for initiating the call.

3. Unfair or Deceptive Acts or Practices

940 CMR 3.00: Attorney General’s regulation to determine whether conduct, terminology, or representations involve unfair methods of competition or unfair or deceptive acts or practices, in violation of G.L. c. 93A, § 2(a).

940 CMR 19.01: Attorney General’s regulations pertaining to the competitive electricity market to protect consumers from unfair or deceptive acts or practices and to provide retail electricity sellers and marketers with notice of the illegality of such acts or practices. Violations of these regulations are a violation of G.L. c. 93A, § 2(a).

Docket D.P.U. 20-47

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