Thursday, 18 July 2019 12:06

Energy retailers cop penalties for alleged ‘misleading’ discount claims Featured

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Energy retailers Dodo and CovaU have been hit with penalties by the competition regulator, the ACCC, for alleged misleading claims about discounts available on their energy plans.

M2 Energy — trading as Dodo — and CovaU have both committed to refund their affected customers as well as having paid penalties totalling $37,800 and $12,600 respectively after the ACCC issued each energy retailer with infringement notices for alleged misleading claims about the discounts.

The ACCC said that between October 2017 to April 2019 Dodo advertised discounts on plans in Victoria based on market usage and/or daily supply rates which were about 4% higher than its standing offer rates.

And, similarly, CovaU advertised discounts on electricity and gas plans in Victoria and NSW from January to December 2018 based on market offer usage rates which were up to 20% higher for electricity and up to 7% higher for gas, than the rates which applied to CovaU’s standing offers.

In a statement issued on Thursday, the ACCC said it considered that both businesses made false and misleading claims about percentage discounts consumers would receive because those discounts applied to Dodo and CovaU’s market offer rates which were higher than Dodo and CovaU’s standing offer rates.

“As a result of using higher market offer rates to calculate the percentage discount, we allege the actual savings offered to consumers were much lower than advertised,” ACCC chair Rod Sims said.

“Energy retailers are reminded that any discount must be genuine and not based on confusing and inappropriate calculations which result in inflated percentage discount claims being advertised to consumers,” Sims said.

From 1 July, the Retail Electricity Code limits the standing offer prices that are charged to consumers in NSW, South Australia and south-east Queensland using a cap called the default market offer.

The Code also requires retailers to advertise the prices of their plans by reference to the DMO. Similar obligations apply in Victoria under its "Victorian default offer".

“While the Australian Consumer Law allows us to pursue misleading claims after the fact, the Code and the new default market offer will help consumers to compare plans in a much more transparent way,” Sims said.

“With the default market offer now mandated as the standard base rate, energy discount claims can now be easily understood, enabling consumers to shop around for a better deal without being potentially misled by confusing discount advertisements.”

The ACCC has previously taken court action or issued infringement notices against energy retailers over their discount claims, including Kleenheat, Click Energy, One Big Switch, Alinta Energy, AGL and Origin Energy.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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