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PSC Enforcement Unit Alleges Enrollment Violations By Retail Supplier, Alleges Touchless & e-TPV Enrollment Still Requires Signed Contract

Enforcement Recommends Requiring Suppliers' Customers To Be Dropped To Default Service Unless Supplier Obtains Signed Contract

December 14, 2020

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Copyright 2010-20
Reporting by Paul Ring •

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The Compliance and Enforcement Unit ('CEU') within the Consumer Affairs Division ('CAD') of the Maryland Public Service Commission has recommended that the PSC's Office of Staff Counsel initiate a complaint against StateWise Energy Maryland LLC ('StateWise') concerning alleged violations of marketing and enrollment rules

CEU alleged various violations in a report following a review of consumer complaints against StateWise and a review of documents supplied by StateWise pursuant to subpoena. The complaints were filed with CAD between May 1, 2019 and May 31, 2020

Among other remedies, CEU recommended that StateWise be required to drop all of its existing customers to default service unless a signed contract is obtained from active customers for continued enrollment with StateWise.

StateWise provided the following statement to concerning the matter:

"Statewise Energy takes compliance with the laws of Maryland, and their interactions with customers very seriously.

"StateWise Energy is reviewing the Maryland PSC's Consumer Enforcement Unit report and looks forward to clarifying any concerns they may have to resolve the allegations in an appropriate manner."

--- Statement from StateWise Energy

In a report, CEU alleged, "Following CEU’s investigation, it appears that StateWise is not providing customers with a contract that meets all regulatory requirements. The marketing professionals StateWise hires are agents of StateWise, and are therefore required to comply with applicable Maryland regulations."

In brief, CEU alleges that StateWise is not providing customers with a copy of the "executed contract" as required under COMAR, and, for in-person enrollments, is not obtaining a "signed" customer contract under its "touchless" enrollment process. COMAR provides that, "If a supplier solicitation is in writing or a supplier contract is provided in response to documents submitted upon personal contact, a signed contract is required."

CEU alleged, "COMAR and COMAR detail the minimum contract requirements with regard to electricity and gas suppliers, respectively, then go on to specify that, 'a supplier shall provide the customer a copy of the executed contract and completed Contract Summary' when the contracting process is complete. (Emphasis added [by CEU].) A contract is defined as 'the total legal obligation that results from the parties' agreement,' under Commercial Law § 1-201(12). (Emphasis added [by CEU].) By contrast, under COMAR B(5), the Contract Summary is defined as 'a summary of the material terms and conditions of a retail energy supply contract, on a form provided by the Commission.' The Contract Summary is a summary of key points, typically about one-page long, which, by definition, is insufficient to stand alone as the total legal obligation between the parties."

CEU alleged, "In addition, Commercial Law § 14-302 sets requirements for contracts provided by door-to-door salespeople. Among those requirements, § 14-302(1)(ii) includes specific language pertaining to a customer’s right to cancel the transaction and § 14-302(3) speaks to information necessary for the seller to provide to the customer regarding notice of cancelation. When the requirements of Commercial Law § 14-302 are not followed by sellers, this constitutes unfair or deceptive trade practice."

CEU alleged, "In StateWise’s response to the Commission’s subpoena, it provided an 'iSign Form' agreement that StateWise explained was used for both door-to-door enrollments and person-to-person sales, to allow for a 'touchless' enrollment. In StateWise’s practice, the accompanying Electronic Third Party Transcript ('e-TPV Transcript') used to verify the agreement was sent electronically to a consumer's phone or email. However, sending the e-TPV transcript does exempt the supplier from regulations requiring StateWise to obtain a signed supplier contract from the customer before the enrollment is completed. CEU finds instances where StateWise has not obtained a signed contract from the customer prior to enrollment. Further, customers have reported that they were not aware that they were enrolling with a retail energy supplier or providing StateWise with consent to have their account switched to StateWise. Providing a contract summary along with a signed e-TPV form is not sufficient to meet COMAR’s contracting requirements."

CEU alleged, "Review of the consumer complaints filed with CAD between May 1, 2019 and May 31, 2020 revealed that the required supplier contract was not found in any of these cases, only the Contract Summary and that the required language and form of notice under Commercial Law § 14-302 (1)(ii) and (3) was not present. There is no indication that the required notice was provided to customers. In response to the Commission’s subpoena, StateWise provided generic blank 'Notification of Cancellations' for the referenced complaints. However, none of the complainants acknowledged receipt of the form, which leads CEU to question whether this document was provided to customers."

CEU further alleged that, "The CEU’s investigation revealed instances of StateWise enrolling new customers without their knowledge and consent as well as using marketing practices that increase the likelihood of unauthorized customer enrollment."

CEU alleged, "A 'customer' is defined as the 'account holder' and 'a supplier may not enroll a customer without the customer’s consent.' ... StateWise has been informed in decision letters (with reference to COMAR citations) in several complaint cases that a non-customer is not allowed to enroll a customer's account. However, the complaints filed against StateWise show that spouses and other non-customers of record were permitted to enroll the accounts of customers. The TPV recordings provide evidence of StateWise’s practice of allowing non-customer of records to enroll the customer of record supply services."

CEU alleged, "In addition, the i-Signed e-TPV process referenced above has led to instances of enrollment of unauthorized individuals, rather than the customer of record. The e-TPV transcripts do not provide affirmation of consent for enrollment, which is especially problematic in cases where the supplier has not validated the email address to ensure that it belongs to the customer of record. Used in this manner, StateWise’s e-TPV transcripts is insufficient to address the affirmative consent requirements of COMAR and COMAR"

CEU also alleged instances of misrepresentation

CEU alleged, "Multiple complaints filed against StateWise cited misrepresentation, with complainants stating that they were promised savings, rebates, and gift cards that did not materialize. Other complainants were told by StateWise representatives were sent by a State agency or employed by the local distribution utility (i.e., BGE), rather than disclose that they were agents of a retail energy supplier (i.e., StateWise)."

CEU alleged, "Complainants reported that they were told by StateWise representatives that BGE was inquiring about their bill, or that they would save money or receive a rebate. They did not understand that they were consenting to have their service switched to StateWise. Multiple complaints described this unacceptable behavior reveals a pattern of conduct by StateWise ... The third-party verification ('TPV') recordings support the alleged misrepresentation by supplier agents. Complainants reported being unaware they were switched until notice of the change in energy supply was received."

CEU alleged, "As another example, StateWise’s User’s Manual for Retail Sales features a picture of a tablecloth that reads, "Ask us how StateWise customers can get free LED light bulbs!" Though marketed to prospective customers, the free LED bulbs are only available to customers who have three months of continuous service with StateWise, and customers must specifically request them in order to receive them. This, and other offers used by StateWise representatives, (e.g. rebates and gift cards), were reported as potentially misleading by customers after customers belatedly realize they gave consent to have their service switched. The supply services were canceled within one billing period, rendering them ineligible for any offers."

CEU recommended that the Office of Staff Counsel initiate a proceeding to pursue the following actions:

1) Initiate a formal complaint into StateWise’s enrollment practices.

2) Direct StateWise to identify and refund affected customers the difference between the billed amounts and the utility rates where no signed contract exists to support the enrollment.

3) Default all existing customers to their respective utility within 30 days unless a signed contract is obtained from active customers for continued enrollment with StateWise.

4) Require that overage charges be included on the contract summary, when applicable, as well as the correct early termination fee.

5) Require revisions to any StateWise documentation, marketing, and/or training materials to remove 'Spouse' as an authorized person.

6) Pursue a civil penalty, as appropriate, pursuant to PUA § 7-507(1) and § 13-201 for engaging in misrepresentation and deceptive practice and for failing to comply with the identified consumer protection regulations under COMAR 20.53.07 and 20.59.07.

7) Such other relief as the Office of Staff Counsel determines is appropriate.

The specific alleged violations of COMAR alleged by CEU were as follows:

1) Defects in contract practices: COMAR 20.53.07 and COMAR 20.59.07; Commercial Law Article, Annotated Code of Maryland, §14-302.

2) Unauthorized enrollment of customers: COMAR and COMAR20.59.07.05A; COMAR and

3) Supplier agent conduct: COMAR C and COMAR C; COMAR20.53.07.07 and COMAR; COMAR and COMAR20.59.08.05B.

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