Retail Supplier To Cease Marketing In Illinois Under Consent Decree

Note: This story was first published at 12:40 pm on Nov. 19 with an alert to our email subscribers

Illinois Attorney General (AG) Lisa Madigan said that IDT Energy Inc. has, as stated in a news release from the AG's office, "agreed to enter into a consent decree to provide refunds totaling $3 million to more than 176,000 customers."

"The consent decree also bans the company from marketing in Illinois for two years," the AG's office said

The AG's office alleged in a news release that, "Madigan’s lawsuit [which resulted in the consent decree], filed in Cook County Circuit Court, alleges IDT and its sales representatives aggressively and disproportionately targeted African-American residents in the ComEd territory using deceptive sales tactics to sign them up for expensive contracts for electricity. IDT sales agents failed to tell customers critical information, including the price and length of the contracts. Madigan alleges many customers were given the false impression they were signing up for a discounted rate from ComEd when in reality, they were switching to IDT, where they routinely paid higher prices for their electricity."

"The alternative retail electric supply industry is rife with fraud and deceit, and I once again call on the Illinois General Assembly to ban these companies from operating in the residential market in the state," Madigan said.

The AG's office alleged in a news release that, "Madigan’s office uncovered [a] disparate impact on African-American customers by comparing the total number of IDT customers enrolled in each zip code to the total number of ComEd accounts in that zip code. In Chicago, nine of the 10 zip codes with the highest IDT enrollments are in neighborhoods where the population is more than 90 percent African-American. For example, more than 30 percent of all ComEd customers have been enrolled as IDT customers in each of the zip codes covering Austin, Englewood, South Shore and West Garfield Park -- each of which consists of at least 93 percent African-American residents. To compare, only one percent or fewer of all ComEd customers have been switched to IDT in zip codes covering the neighborhoods of Edison Park, Lincoln Park, Sauganash and the West Loop -- none of which contains more than five percent African-American population."

The AG's office alleged in a news release that, "IDT’s deceptive sales pitches, delivered mainly through telephone and door-to-door solicitations, bombarded customers with false claims of lower electricity rates and savings. Madigan alleges that IDT advertised a so-called 'free' electric supply deal during telephone solicitations and on sales receipts at Family Dollar and other discount retail stores without explaining that 'free' electric supply would lead to charges on the customer’s electric bills. IDT also offered rebates and rewards programs without sufficiently disclosing the terms and conditions. Madigan’s lawsuit alleges that IDT’s sales representatives made no effort to accurately describe the product and misrepresented IDT’s affiliation with ComEd to convince customers nothing would change even though they were entering into a contract with a for-profit company."

The AG's office said that, as part of the settlement, IDT’s former and current customers will receive a notice informing them of the settlement and their rights to a refund that will be based on each customer’s electricity usage. They will also receive information about their right to cancel their contract with the company at no charge.

The AG's office said that, "Madigan reminds people that almost no one who signs up with an ARES pays less and strongly encourages people not to sign up with any company offering to switch your electricity."