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New York Attorney General Files Suit Against Retail Supplier, Seeking Penalties, Restitution

March 4, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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New York Attorney General (AG) Letitia James recently filed a lawsuit against Major Energy Services LLC and Major Energy Electric Services, LLC [together, Major Energy or the company(ies)], with the suit naming current parent Via Renewables, Inc. f/k/a Spark Energy, Inc. as Relief Defendant, for allegedly, "overcharging and misleading New York consumers with false advertisements."

In a news release, the AG's office alleged, "An investigation by the Office of the Attorney General (OAG) found that consumers throughout the state paid tens of millions of dollars more for Major Energy’s services than they would have paid to their local utilities, despite promises that they would save on their electric bill."

The alleged behavior cited in the suit relates to 2011 through 2016. Via (then Spark) acquired Major in August 2016

Via Renewables provided the following statement concerning the matter:

"We do not comment on pending legal matters, however, as the complaint details, all allegations of wrongdoing are from the time period prior to the acquisition of Major Energy by VIA Renewables."

--- Statement from Via Renewables

In a 10-K, Via Renewables made the following disclosure concerning the suit:

"Prior to the purchase of Major Energy by the Company, in 2015, Major Energy Services, LLC and Major Energy Electric Services were contacted by the Attorney General, Bureau of Consumer Frauds & Protection for State of New York relating to their marketing practices. Major Energy has exchanged information in response to various requests from the Attorney General and recently agreed to respond to additional questions via remote proceedings in October of 2020. In January 2022, New York State Attorney General filed a complaint against Major Energy regarding the historical acts of Major Energy (a pre-acquisition matter). Via Renewables, Inc. was also named in the action due to current ownership. We are responding to the complaint (due end of March 2022) and seeking indemnification from the Major Energy former owners."

In a news release, the AG's office alleged, "Often the company’s sales representatives misled consumers by falsely claiming the representatives worked for the consumer’s local utility, displaying phony badges, or wearing construction hard hats and vests during door-to-door solicitations, all to get consumers to change their services to Major Energy. In many instances, consumers did not realize they had been enrolled with Major Energy because some sales representatives enrolled them without their consent."

The suit alleges, "Sales representatives gave false reasons to gain access to consumers’ utility bills and account numbers such as claiming there was a power problem or a safety issue."

The suit alleges, "Major Energy representatives falsely told consumers that Major Energy would lower their energy bills."

Among other things, the suit alleges, "Major Energy’s sales representatives used a variety of deceptive and high pressure sales tactics in order to make sales. For example, Major Energy directed sales representatives to tell consumers who were not interested in making a switch, 'I know you probably think that I’m trying to sell you something . . . actually it’s my job to just make sure that everyone understands their rights under deregulation and gets the savings that they MAY BE MISSING ON YOUR GAS BILL.' (Emphasis in original.) In fact, the purpose of the visit was to make a sale and not simply to provide information."

The suit alleges, "Major Energy also directed their sales representatives to instruct consumers that they 'only needed to say ‘yes’' to the questions asked in the TPV call, which occurs after the consumer purportedly has agreed to enroll in the service."

The suit alleges, "Major Energy’s sales representatives impersonated consumers, including in TPVs, in order to switch consumers’ accounts over to Major Energy."

The suit alleges, "many sales representatives gave the misleading impression that they worked for the local Distribution Utility to get a consumer to change service, such as by displaying a badge from a Distribution Utility or by wearing construction hard hats and vests during door-to-door solicitations."

The suit alleges, "In other cases, sales representatives falsely told consumers that they had been overcharged because of legislation that President Obama signed in order to convince them to change service."

The suit alleges, "For fixed-rate contracts not obtained through door-to-door marketing, Major Energy imposed a termination fee, which was the greater of $500 or the projected amount of natural gas or electricity to be consumed by the customer for the remainder of the term, multiplied by 2 cents per KWh and/or 20 cents per therm. This termination fee was a direct violation of the UBP, which does not allow cancellation fees for these types of sales."

The suit alleges, "Major Energy was aware of the consistent and systemic fraudulent and deceptive business practices taking place. For example, Major Energy’s own records how that, in response to one consumer’s complaint, a Major Energy representative admitted, 'I’ve worked here for a long time. . . . I’ve heard some amazing lies, let me tell you.' Major Energy’s own records also show that another representative freely admitted that Major Energy received a lot of complaints 'due to -- how do I say it in a nice way -- I’m going to be point blank honest -- is due to misinformation, shall we say, given by the door-to-door representatives.'"

The suit alleges, "Defendants have repeatedly violated GBL § 349 by engaging in acts and practices including but not limited to: (i) making misrepresentations either expressly or by implication, including (a) that customers will realize savings by switching to Major Energy; (b) that Major Energy’s electricity or natural gas service rates were the 'best available'; (c) that Major Energy and/or its agents are, or are acting on behalf of the Distribution Utility; (d) the rates for retail and/or natural gas services; and (e) that Major Energy’s services charges will not be higher than the Distribution Utility’s service charge; and (ii) failing to disclose that (a) Major Energy’s service charges may vary from month to month; and (b) the fact that Major Energy customers will continue to be responsible for the Distribution Utility’s delivery service charges in addition to Major Energy’s commodity service charges; and (iii) switching consumers to Major Energy’s services without their consent."

The AG also alleged violations of GBL Article 22-A, § 350 which prohibits false advertising in the conduct of any business, trade or commerce or in the furnishing of any service in the State of New York

The suit alleges that, "Relief Defendant Via Renewables continues to benefit from the deceptive acts and practices, including by benefiting from contracts that were fraudulently and deceptively obtained from consumers by Major Energy prior to Via Renewable’s acquisition of Major Energy. From at least that time, Via Renewables had knowledge of these deceptive acts and practices."

The suit alleges, "Relief Defendant Via Renewables has no legitimate claim to these funds or assets and will be unjustly enriched if it is not required to disgorge funds or the value of the benefit it received as a result of Defendants Major Energy Services LLC and Major Energy Electric Services LLC’s fraudulent, deceptive, and illegal acts and practices."

In the suit, the AG is seeking an injunction to stop Major Energy’s alleged misleading advertising and marketing practices, as well as for legal and equitable relief to address Major Energy’s alleged fraudulent and unlawful conduct, including restitution for harmed consumers and disgorgement. In addition, the AG seeks damages, the imposition of civil penalties, and costs

The suit also specifically seeks an order declaring all contracts for energy services found in violation of GBL § 349-d to be void and unenforceable under GBL § 349-d(8) at the option of consumers and enjoining Defendants from enforcing such contracts

In addition to the plain allegations above, the AG's suit also makes broader allegations concerning more vague language which is not uncommonly used by ESCOs

For example, the AG's suit alleges, "In telemarketing scripts, Major Energy directed sales representatives to solicit consumers to 'see if you qualify for savings on your gas and electric bill,' 'to discuss potential savings,' or to see 'if you would like to take advantage of the savings.' These statements gave the misleading impression that Major Energy’s rates would lead to savings, when in reality Major Energy’s rates regularly exceeded the Distribution Utility’s rates, and did not lead to savings."

The AG's suit also alleges as follows:

70. "In print advertising distributed to consumers, Major Energy made the false and/or misleading claim that it offered the 'best available rates' for gas and electricity

71. "In fact, as stated above, consumers repeatedly paid more than they would have paid their Distribution Utility.

72. "Major Energy also represented in its print advertising that, '[u]nlike any other ESCO,' Major Energy would give consumers 'tools to manage and monitor [their] energy consumption and control [their] costs.'

73. "In fact, such 'tools' were not effective in monitoring and controlling energy consumption and costs.

74. "Moreover, many consumers did not receive such tools.

75. "Even if consumers did use the tools, any money saved was de minimis.

76. "For example, Major Energy offered some consumers energy-efficient light bulbs, which is not a monitoring tool and had a negligible effect on consumers’ energy consumption costs."

The suit was filed in the Supreme Court of the State of New York for the County of New York

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