De-identified Report on designated Marketing and Transfer issues 1 Cases received 1 January June November 2010

Transcription

1 De-identified Report on designated Marketing and Transfer issues 1 Cases received 1 January June November Overview Marketing cases Misleading (977 cases) Pressure Sales (317 cases) Non Account Holder (76 cases) Information (239 cases) Other (117 cases) Transfer cases Without Consent (516 cases) In Error (678 cases) Contract Terms (1,285 cases) Cooling-Off Rights (449 cases) Marketing case studies Transfer case studies Legislation Glossary Overview Executive summary In summary, this report shows the following key trends: A significant increase in Retailer 7 cases. It is the retailer with the most EWOV marketing and transfer complaints and has the most cases in all of the nine individual issue categories. Second tier retailers continue to create the most marketing and transfer complaints. On average, almost two thirds of cases concern second tier retailers. Most retailers experienced a decline in case numbers. Retailer 7 and Retailer 3 are the only retailers with more than 10 cases registered that experienced an increase in cases compared to the last report. Marketers make misleading statements about the smart meter as a way of selling their product and as a means of asking a customer to present their current bill. Access to a customer s bill can lead to talk about tariff rates and charges. Retailer 7 and Retailer 1 have the most cases about this issue. There are fewer complaints about cooling-off rights as retailers appear to have resolved systemic issues about their contract cancellation processes. Pressure sales tactics may be increasing, however it is unclear whether this indicates a change in marketing practices. Other marketing cases had the largest percentage decrease. These are the types of cases which do not easily fit into the other EWOV issue categories. 1. Data referred to in this report was obtained on 22 July

2 What does this report cover? This report covers marketing and transfer issues in cases received by EWOV between 1 January 2010 and 30 June This is EWOV s sixth report in this format since the reporting period July 2007 to December Prior to providing these comprehensive details, EWOV reported on selected scheme participants individually. EWOV continues to do this by producing interim reports where emerging trends involving individual retailers are identified. What marketing and transfer issues are examined in this report? Every case received by EWOV is registered with an issue (or issues) that reflect the concerns raised by the customer. This report covers cases registered with the following issues: Marketing > Misleading Marketing > Pressure Sales Marketing > Non Account Holder Marketing > Information Marketing > Other Transfer > Without Consent Transfer > In Error Transfer > Contract Terms Transfer > Cooling Off Rights Who receives this report? EWOV has provided a version of the report which identifies energy retailers to the Victorian Essential Services Commission (ESC), Consumer Affairs Victoria (CAV), the Australian Competition and Consumer Commission (ACCC) and the Australian Energy Regulator (AER) in accordance with the Market Conduct Reporting Protocol 2. This protocol requires EWOV to report on cases that involve potential compliance issues with the Victorian Fair Trading Act 1999, the Commonwealth Trade Practices Act 1974, and the ESC s Energy Retail Code 2009 and Code of Conduct for Marketing Energy in Victoria This de-identified version of the report is sent to all Victorian energy retailers. Each retailer is provided with a code, so it can identify its own case numbers and issues. EWOV will also make the de-identified version publicly available on its website for community agencies and any other interested parties. What general trends are there? There is a significant increase in Retailer 7 cases The most noticeable trend for 2010 is the increase in Retailer 7 cases. It is now the retailer with the most EWOV marketing and transfer complaints and the highest number of complaints in all of the nine individual issue categories examined. The data in this report shows that: 2 The Market Conduct Reporting Protocol is at Appendices B D of FB99-4C60-A BF14639A/0/MarketCodeConDiscussionPap_FinalFeb02.pdf. It is also reflected in the Memorandum of Understanding between CAV and the ESC; see

3 Retailer 7 cases are up 59% from the previous six months an increase of 489 cases. 29% of all EWOV marketing and transfer cases were registered to Retailer 7. During this reporting period, EWOV received six marketing and transfer cases per working day about Retailer 7. In trying to find a reason for this significant upward trend, EWOV asked Retailer 7 to comment on the case increases. In response, it informed EWOV that its marketing complaints are proportionate to the volume of prospective sales calls made. EWOV is not privy to the number of sales calls that Retailer 7 makes, however its overall cases to EWOV have increased significantly. Compared to the same reporting period last year, its overall cases have increased by 149%, from 1,358 to 3,386. While this may be symptomatic of an increasing customer base acquired by more sales activity, the increase still represents much customer dissatisfaction. Retailer 7 also stated that it has now introduced greater supervisor and manager review of every complaint it receives. As a consequence, EWOV may observe a decline in case numbers and will monitor this. Second tier retailers continue to create the most marketing and transfer complaints The table below shows that most cases involve second tier retailers, compared to the first tier retailers. On average, almost two thirds of cases concern second tier retailers. Issue category Percentage (%) of cases received by type of retailer First tier Second tier General enquiry Marketing > Misleading Marketing > Pressure Sales Marketing > Non Account Holder Marketing > Information Marketing > Other Transfer > Without Consent Transfer > In Error Transfer > Contract Terms Transfer > Cooling Off Rights It is reasonable to presume that newer retailers without a brand history or inherent host retailer customer base will have to market themselves more to get new customers. As they will be more visible in the marketplace this will have an effect on the number of cases EWOV receives. Most retailers experienced a decline in case numbers A positive trend has been the continued decline in Retailer 6 cases, the decrease in Retailer 4, Retailer 12 and Retailer 9 cases and the continued reduction in Retailer 10 cases. All retailers with more than 10 cases registered, except Retailer 7 and Retailer 3, had a decrease in cases compared to the last report. 3 As there were less than 100 cases in this category, this is not a statistically sound percentage

4 Retailer 6 cases decreased by 296 cases compared to the last six month report. This is a 26% decrease, which is significant for a larger retailer. Retailer 6 advised EWOV that a decrease in marketing cases is a result of service improvements made in its sales team. These improvements included: Redefining its customer complaint handling and reporting process. Conducting national sales quality workshops. Providing awards to marketers who achieved sales objectives without attracting customer complaints. Providing a customer with a visual summary of the key product features on a single page and a Frequently Asked Questions document. Improving its call verification review and feedback process. In the last marketing report, Retailer 4 had the highest number of complaints in six of the nine issue categories examined, had more marketing complaints than Retailer 6 and overtook Retailer 7 as the second tier retailer with the most cases. This trend has now reversed. While cases are still high, they have decreased from 825 to 673. This is an 18% decrease from the last report. EWOV asked Retailer 4 to comment on why its cases decreased. In response it stated that Retailer 4 has strengthened incentives and penalties for door-to-door sales representatives and the sales company, in order to drive better overall behaviours in the field and also increased monitoring and enforcement activities on door-to-door sales activity. Retailer 4 has not provided EWOV with the full details and outcomes of its new practices in trying to reduce marketing complaints. It is too early to assess whether these new processes have led to sustained improvements in customer service and regulatory compliance. EWOV will monitor this for the next report and gather more detailed information. Despite the decrease in this report however, Retailer 4 marketing and transfer cases are still relatively high. Compared to the same reporting period last year, its cases have increased by 38%, from 486 to 673. Retailer 10 cases fell by 64% from 124 to 45 cases. Since EWOV produced a report focusing on Retailer 10 s marketing and transfer cases, its cases have continued to decrease in number. In examining the decreases for other retailers, Retailer 12 cases decreased by 35 (18%) from 199 to 164 cases, and Retailer 9 cases decreased by 49 (92%) from 53 to 4 cases. Marketers are using information about smart meters to mislead customers Customers complained about marketers using information about smart meters to mislead them into a contract. Retailer 7 and Retailer 1 cases on this issue are prominent compared to other retailers, and can be seen in the table on page 11. In analysing the cases, it shows that marketers use misleading statements about the smart meter as a way of selling their product and as a means of asking a customer to present their current bill. Access to a customer s bill can lead to talk about tariff rates and charges. It appears that that there is no standard misleading statement, but there are re-occurring issues in the cases for each retailer. For example, marketers; Misrepresenting that Retailer 7 will waive the smart meter fee Stating that Retailer 7 will be the company installing the smart meters Misrepresenting that Retailer 1 offers a discount or rebate on the smart meter fee Stating that cheaper rates with Retailer 1 will help off-set the smart meter charge

5 There are fewer complaints about cooling-off rights Cases concerning cooling-off rights dropped by 86 cases from 535 to 449, a 16% decrease. In September 2009, EWOV registered systemic issues cases with three retailers about their failure to action a customer s cooling-off request when notified. The matter was referred to the ESC. Since then these retailers have identified and taken measure to try to fix the systemic problem, particular to itself. In this report, these three retailers all experienced a drop in cases about cooling-off rights. It may be that EWOV s case numbers in this issue category decreased as a direct result of this process. Nevertheless, the number of cases registered to them suggests that these types of complaints still remain a problem. There would have been a greater decrease in total cases about cooling-off rights had there not been such a sharp increase in Retailer 7 cases - a 92% growth from 63 to 121 cases in this category. The majority of these are about cooling-off rights not being actioned. Pressure sales tactics may be increasing Cases about pressure sales increased 19% (50 cases) from 267 to 317 cases. This is the biggest percentage increase for a single issue. However cases about misleading marketing, although still high, decreased by 6% (58 cases) from 1,035 to 977 cases. Although these changes are not statistically significant, it may indicate that the public are less easily mislead due to being more informed about their rights, yet pressure sales techniques continued to be experienced. However, it is important to note that misleading marketing and pressure sales are similar types of marketing behaviour and often overlap or are experienced by a customer during the same visit or phone call. As such it is not clear whether the 19% increase in pressure sales cases reflects a change in marketing practices. Due to the similarity, EWOV may register a case as a pressure sale when it is more properly a misleading conduct sale, and vice versa. When these issue categories are examined together, by combining case numbers, there were 1,294 cases registered in this reporting period and 1,302 cases in the last six month period. This is a difference of only 8 cases which suggests that there may have been no significant overall change. Other marketing cases experienced the biggest percentage decrease. These are the types of marketing cases which do not easily fit into the other issue categories. Cases decreased by 59% (69 cases) from 186 to 117 cases. This is overwhelmingly the biggest percentage decrease for a single issue. Sometimes the marketer is alleged to have ignored Do Not Knock or No Canvassing stickers, or telephoned a customer who is listed on the Do Not Call Register. There has been a slight decrease in these cases since the last report (5 cases), but this is not enough to suggest a cause of the decrease. A better explanation is that EWOV is receiving more detailed information during the initial customer contact and so is able to better fit the presenting issue into the main issue categories

6 The distribution of cases by each retailer and respective changes since the last report This table shows the marketing and transfer case numbers by each retailer and the respective changes since the last six month report: January to June 2010 July to December 2009 Six monthly change Retailer Case numbers % share by retailer Case numbers % share by retailer Case numbers % change Retailer % 1, % Retailer % % Retailer 8 8 < 1% 3 < Retailer 9 4 < 1% % Retailer % % Retailer 15 1 < 1% Retailer 13 2 < 1% 10 <1-8 - Retailer 7 1,313 29% % Retailer 14 5 < 1% 11 <1-6 - Retailer % % Retailer % % Retailer 5 16 < 1% 18 <1-2 - Retailer % % Retailer % % Retailer % % Not allocated % % Total 4, , % The distribution of cases by each issue category and respective changes since the last report The table below shows how case numbers in each issue category changed over the last six months Marketing and transfer issue July to December 2009 January to June 2010 Numbers change Percentage change Transfer > Contract Terms 1,199 1, % Marketing > Misleading 1, % Transfer > In Error % Transfer > Without Consent % Transfer > Cooling Off Rights % Marketing > Pressure Sales % Marketing > Information % Marketing > Other % Marketing > Non Account Holder % 4 A case is registered as not allocated when a customer tells EWOV about their concern, but does not want EWOV s assistance and/or does not know or tell us the company s name. See Glossary on page

7 What qualifications are there? As noted in EWOV s previous reports, the following qualifications need to be taken into account when reviewing this report: EWOV s analysis is hindered by its scope EWOV only looks at the cases it receives. EWOV is not always privy to the amount of marketing activity undertaken by each retailer during and prior to this reporting period. Also EWOV does not know about the efficiency of each retailer s internal complaint management procedures and the robustness of monitoring its marketers. These and other considerations will affect complaint numbers, as will each retailer s customer numbers. This affects EWOV s ability to analyse trends and examine the bigger picture cause of complaints. Marketing and transfer issues are most often systemic in nature. However, some customers do not complain to EWOV. As such, the marketing and transfer case issues received by EWOV should be viewed as indicative of wider dissatisfaction by a broader group of consumers than just those who have complained to EWOV. It is worth keeping in mind that across all retailers there were 545,391 transfers in Victoria from January 2010 to June During that time, EWOV received 4,484 marketing and transfer cases. This equates to about one case raised with EWOV for every 122 completed transfers. The table below makes a comparison with other reporting periods and shows how there have been more cases per number of transfers in this reporting period. Reporting period Ratio of cases received to completed transfers January to June :122 July to December :125 January to June :118 July to December :117 January to June :132 July to December :248 Most cases are referred complaints This report is based on data taken from enquiries and complaints. Complaints are categorised as either Unassisted Referrals, Assisted Referrals or Investigations (Stage One, Stage Two, Stage Three or Final Stage). Please refer to the glossary on page 49 for definitions. The majority of cases in this report are Unassisted and Assisted Referrals. EWOV has not investigated these matters and generally only has the customer s side of the story. Customers sometimes lodge more than one case For example, if a customer states their electricity and gas supplies were transferred without their consent, EWOV will register an electricity case and a gas case. (EWOV does this as the transfer systems are different, and hence resolution timeframes and outcomes vary)

8 Customers sometimes re-contact EWOV Customers sometimes re-contact EWOV after previously being referred back to their company, because their concerns remain unresolved. This can result in EWOV registering an Assisted Referral after a previous Unassisted Referral or registering an Investigation if the matter remained unresolved after an Assisted Referral. Customers may have complaints relating to more than one issue Based on the customer s statement, EWOV sometimes registers two issues for the one case for example, Marketing > Misleading and Transfer > Without Consent. As outlined above, EWOV staff register cases by fuel (electricity, gas, LPG or water) and case type (enquiry and complaint). While some issues can be interlinked, other issues may need to be investigated separately (e. g. transfer in error followed by a disconnection of supply due to an outstanding account). Also, a customer may have issues with two different providers

9 2. Marketing cases 2.1 Misleading (977 cases) In these cases, the customer states that a marketer has provided them with potentially misleading information. Where they agree to transfer the account on the basis of such information, issues to do with transfer and contract terms often arise. Misleading is a broad term which can include omission, as well as misrepresentation, of relevant information. Case profile 977 cases, compared to 1,035 cases in the previous half year, a 6% decrease. 863 enquiries and referred complaints and 114 investigated complaints. 351 cases (36%) involved first tier retailers, 603 (62%) involved second tier retailers and 23 cases (2%) were not allocated. Retailer 7 cases increased significantly and Retailer 3 cases continued to increase The most noticeable trend in this category is the increase in Retailer 7 cases, up 76 cases (47%) from 163 to 239 cases. The only other retailer to experience a notable case increase was Retailer 3 - up 40% from 67 to 94 cases. The steady increase in Retailer 3 cases has been consistent over the last two reports. Retailer 4 and Retailer 10 cases decreased significantly Retailer 4 cases decreased by 70 cases from 226 to 156 cases (a 31% decrease). This is a pleasing trend, however its cases still remain high compared to 78 cases registered in January to June Similar to the trends in most other issue categories, Retailer 10 s cases decreased from 27 to 7 cases. In the last 12 months, its cases in this category have decreased significantly from 83 cases to 7 cases. Marketers are using information about smart meters to mislead customers Customers complained about marketers using information about smart meters to mislead them into a contract. Retailer 7 has 15 cases and Retailer 1 has 9 cases where a customer believed a marketer made misleading representations about the smart meter as a method of getting a customer to enter into a contract. An analysis of these cases in made on page 11 of this report. Customers are misled by marketers claiming they are from the government or by representations about smart meters Retailer 7 and Retailer 2 clearly stand out as having the most cases where the marketer used the phrase government and the customer found this misleading

10 Door-to-door marketing continues to be preferred to telephone sales 809 cases (83%) concerned misleading door-to-door sales. This is a decrease of 1% in the last six months, which is statistically insignificant. For 2008, 64% of all misleading marketing cases arose from door-to-door marketing as opposed to phone or other sales channels. In 2009 this rose to 80%. Although EWOV s data is only indicative, this suggests that direct door-todoor marketing continues to be preferred to telephone sales. Cases by retailer and fuel Retailer Retailer Retailer Retailer Retailer Retailer2 Retailer Electricity Gas Retailer Dual Fuel Not allocated 20 3 Retailer 10 Retailer 14 Retailer 9 Retailer

11 Changes to retailer case numbers Company Enquiries and Referred Complaints Jan to June 2010 Investigated Complaints July to Jan to Dec 2009 June 2009 Total Total Total Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total , Some misleading words and phrases that customers stated salespeople used Company Words or phrases used in misleading marketing Government Taking over Nothing will change Representations about green energy Being over charged Smart meter Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total Total

12 These case snapshots show examples of some phrases which commonly mislead customers. Taking over Case reference Marketing retailer What the salesperson said or implied C/2010/9703 Retailer 6 Retailer 6 has the customer s Retailer 7 account number and is taking over its customers accounts. C/2010/2758 Retailer 7 Retailer 7 is taking over all Retailer 11 customers and the customer should provide her driver s licence number to complete a transfer to Retailer 7. G/2010/634 Retailer 4 Retailer 4 is a subsidiary of Retailer 11 taking over the customer s area, however nothing will change. From the government Case reference Marketing retailer What the salesperson said or implied C/2010/13910 Retailer 6 The government and Powercor are informing all residents that they are being overcharged by their current providers, so customers in her area should transfer to Retailer 6. G/2010/4655 Retailer 7 He is from the government and not affiliated to any energy company. C/2010/5584 Retailer 2 He is visiting from the government to ensure the customer is receiving the correct discounts and would like to see her bills. Nothing will change Case reference Marketing retailer What the salesperson said or implied C/2010/12015 Retailer 1 He is trying to arrange a few rebates and nothing will change. G/2010/925 Retailer 3 He is from a distributor and nothing will change. C/2010/12122 Retailer 4 Nothing will change except the customer s bills will now be issued by Retailer 4. He will be able to continue with his current payment arrangement. Representations related to green energy Case reference Marketing retailer What the salesperson said or implied G/2010/1852 Retailer 4 To ensure that the customer and all other residents of her street receive green energy, she needs to sign some paperwork. C/2010/503 Retailer 6 As the customer does not have a green energy contract with Retailer 3, an early termination fee will not apply. C/2010/7162 Retailer 4 The customer was told that his suburb had been selected to take part in the green energy program. When he declined the offer he was told so you don't want to help the environment? Also it was inferred to him that Retailer 4 is the only retailer which offers green energy

13 Being over charged Case reference Marketing retailer What the salesperson said or implied C/2010/7978 Retailer 2 She is from an independent body to help Retailer 6 customers who are being overcharged and would like to see the customer s bill. C/2010/15143 Retailer 7 There was a program on television last night which generated complaints and she is there to help people who are being overcharged. C/2010/9014 Retailer 11 It is Retailer 11 s job to validate meter readings and the customer is legally obligated to show her last bill. She was then told she was being overcharged and Retailer 11 will contact Retailer 3 to arrange a refund. Smart meter Case reference Marketing retailer What the salesperson said or implied C/2010/5685 Retailer 1 The customer should sign with Retailer 1 to get a cheaper rate, a $ rebate for the smart meter charges and a smart meter installed straight away. G/2010/5167 Retailer 2 He is from the Victorian government visiting her to ensure that customers are not being billed smart meter charges. If the customer agrees to transfer to Retailer 2 the smart meter fee of about $ will be waived. C/2010/12990 Retailer 7 The customer was asked to provide her NMI from the electricity bill to help with the installation of a smart meter. See sample case studies on page

14 2.2 Pressure Sales (317 cases) These are cases in which the customer states they ve been exposed to excessive sales pressure in the course of a marketing representation. Where they agree to transfer the account, issues relating to explicit informed consent may also arise. Case profile 317 cases, up from 267 in the previous half-year, an increase of 50 cases (19%). 293 enquiries and referred complaints, and 34 investigated complaints. 113 cases (36%) involved first tier retailers, 190 cases (60%) involved second tier retailers and 14 cases (4%) were not allocated. This shows a 5% increase in cases involving first tier retailers from the previous half-year. Retailer 7 cases increased significantly Retailer 7 cases increased significantly from 46 to 93 cases, an increase of 102%. This is a greater percentage increase for Retailer 7 than in any other marketing issue category. Retailer 6 and Retailer 11 cases increased Retailer 6 and Retailer 11 also experienced noticeable increases in cases. Retailer 11 cases increased almost two-fold from 16 to 29 cases and Retailer 6 cases increased from 45 to 59 cases. Door-to-door marketing continues to be preferred to telephone sales Cases mainly arose from door-to-door sales (88%), an increase of 6% from the last half-year. For 2008, 61% of all pressure sales cases arose from door-to-door marketing as opposed to phone or other sales channels. Although EWOV s data is only indicative, this suggests a continued move by retailers to direct door-to-door marketing and away from telephone sales as the preferred marketing interface

15 Cases by retailer and fuel Retailer Retailer Retailer Retailer Retailer 3 Retailer 1 Retailer Electricity Gas Dual Fuel Retailer 12 Not allocated Retailer Changes to retailer case numbers Company Enquiries and Referred Complaints January to June 2010 July to Dec 2009 Jan to June 2009 Investigated Total Total Total Complaints Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total See sample case studies on page

16 2.3 Non Account Holder (76 cases) In these cases, a retailer marketed to someone who isn t the account holder at the property. If that person agrees to switch to another retailer, the energy account is set up in their name. Often, following this, the new retailer won t then discuss the transfer with the original account holder for reasons of privacy. In the interests of preventing complaints, EWOV maintains that the account holder s consent should be gained or their consent for someone else to act on their behalf. Clause 4.3 of the Code of Conduct for Marketing Energy in Victoria 2009 requires retailers to take reasonable steps to conduct contract negotiations with a person who has the authority to enter into a contract for electricity supplied to the actual site. Cases involving marketing to non-account holders may also be logged under Transfer > Without Consent or other issue categories, so 76 cases is a minimum number. Case profile 76 cases, down 11 cases from 87 cases for the last half-year report. 69 enquiries and referred complaints, and 7 investigated complaints. 15 involved first tier retailers, 59 involved second tier retailers and 2 cases were not allocated. 62% of cases arose from door-to-door marketing, down 21% from the last report. While Retailer 6 case numbers halved, Retailer 7 cases increased Retailer 6 cases halved from 16 to 8 cases. This decrease is countered by a more than twofold increase in Retailer 7 cases from 13 to 28 cases, which is likely just to be indicative of the overall increase in Retailer 7 cases. Cases by retailer and fuel Retailer Retailer Retailer Retailer 12 Retailer Electricity Gas Retailer 11 2 Dual Fuel Not allocated 2 Retailer 10 Retailer

17 Changes to retailer case numbers Company Enquiries and Referred Complaints Jan to June 2010 Investigated Complaints July to December 2009 Total Total Total Jan to June 2009 Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total Who was marketed to? Spouse/partner Adult Son/daughter Not reported Friend Other Housemate Minor Brother/sister Parent This chart shows that most marketing to non-account holders was to a spouse or partner. See sample case studies on page

18 2.4 Information (239 cases) These are cases in which the customer states they ve received marketing information which they do not understand or believe is incorrect. Sometime later, customers may also find out that they were misinformed or not informed during the marketing experience rather than intentionally misled. Some examples include misinformation about contract terms (such as termination fees, the duration of a contract or billing periods), an omission by a salesperson to inform customers about refundable advances, and a customer not receiving an offer summary when requested. Case profile 239 cases, compared to 212 cases in the previous half year, an increase of 27 cases. 214 enquiries and referred complaints, and 25 investigated complaints. 83 cases (35%) involved first tier retailers, 142 (59%) involved second tier retailers, 14 cases (6%) were not allocated. 157 cases (66%) arose from door-to-door sales. Retailer 7 cases increased more than two-fold The increase in cases in this issue category is attributable largely to an increase in Retailer 7 cases, from 26 to 59, a more than two-fold increase of 33 cases. Retailer 1 and Retailer 3 cases also noticeably increased Retailer 1 experienced a proportionately high increase of cases from 9 to 26 cases and Retailer 3 had an increase from 16 to 26 cases. Cases by retailer and fuel Retailer Retailer Retailer Retailer Retailer 1 Retailer Electricity Gas Not allocated 12 2 Dual Fuel Retailer Retailer Retailer 10 4 Retailer

19 Changes to retailer case numbers Company Enquiries and Referred Complaints Jan to June 2010 Investigated Complaints July to Jan to Dec 2009 June 2009 Total Total Total Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total See sample case studies on page

20 2.5 Other (117 cases) These are cases in which the customer states they ve been exposed to some marketing, yet the concerns they raise do not easily fit into the other issue categories. Most cases in this issue category are registered because customers have received unwanted and sometimes regular marketing from doorto-door or telephone sales persons. Sometimes the marketer is alleged to have ignored Do Not Knock or No Canvassing stickers, or has telephoned a customer who states they are listed on the Do Not Call Register. Case profile 117 cases, compared to 186 cases in the previous half year, a decrease of 69 cases. 104 enquiries and referred complaints, and 13 investigated complaints. 43 cases (37%) involved first tier retailers, 57 (49%) involved second tier retailers and 17 cases (14%) were not allocated. 79 cases (67%) arose from door-to-door sales. A significant drop in Retailer 6 and Retailer 4 cases The decrease in cases in this issue category is mostly attributable to Retailer 4 and Retailer 6. Retailer 4 cases dropped from 35 to 20 cases and Retailer 6 s almost halved from 30 to 16 cases. Cases by retailer and fuel Retailer 7 Retailer 4 Retailer Not allocated 13 4 Retailer 6 Retailer Electricity Gas Dual Fuel Retailer Retailer Retailer 10 2 Retailer

21 Changes to retailer case numbers Company Enquiries and Referred Complaints Jan to June 2010 Investigated Complaints July to Dec 2009 Jan to June 2009 Total Total Total Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total See sample case studies on page

22 3. Transfer cases 3.1 Without Consent (516 cases) These are cases where the customer states that a retailer gained the billing rights for a property, without having obtained the account holder s consent. Depending on their existing contract, the customer may also find themselves liable for a termination fee, so there may be an overlap with the Transfer > Contract Terms > Termination Fee issue sub-category. There is also some overlap with the category of Transfer > In Error because erroneous transfers often present initially as transfers without consent. Case profile 516 cases, compared to 552 cases for the last six month period - a 7% decrease. 438 enquiries and referred complaints, and 78 investigated complaints 112 cases (22%) involved first tier retailers, 399 cases (77%) involved second tier retailers and 5 (1%) cases were not allocated. 231 cases (45%) arose from door-to-door sales and 196 cases (40%) from phone sales. Retailer 7 and Retailer 4 made a significant contribution to cases Retailer 7 and Retailer 4 registered the most cases and together make up 62% of the cases in this issue category. Both experienced an increase in case numbers compared to the last report. Retailer 7 cases rose from 127 to 166 cases, a 30% increase. Retailer 4 cases increased from 137 to 155 cases, a 13% rise. A decrease for some other retailers There was a noticeable decrease in cases for Retailer 6 (92 to 57 cases), Retailer 1 (43 to 19 cases) and Retailer 10 (32 to 14 cases)

23 Cases by retailer and fuel Retailer Retailer Retailer Retailer 3 Retailer Retailer 2 Retailer 12 Retailer 1 Retailer 10 Not allocated Retailer 14 Retailer Electricity Gas Dual Fuel

24 Changes to retailer case numbers Company Enquiries and Referred Complaints Jan to June 2010 Investigated Complaints July to Jan to Dec 2009 June 2009 Total Total Total Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total ,187 See sample case studies on page

25 3.2 In Error (678 cases) Sometimes the billing rights for a customer s supply address are transferred between retailers in error. The resulting disruption to the customer s existing payment arrangements may cause them to fall into arrears. The new retailer may send accounts addressed to the occupier, but some customers don t respond because they don t think they have an account with it. Where this continues for a long time, the customer may be at risk of disconnection for non-payment by the new retailer. As mentioned previously, cases allocated to Transfer > Without Consent may also involve error, but after a customer is referred back to the provider, EWOV may be unaware of the outcome. Case profile 678 cases compared to 736 cases in the last report, a decrease of 58 cases (8%). 554 enquiries and referred complaints, and 124 investigated complaints. 296 cases (44%) involving first tier retailers, 369 cases (54%) involving second tier retailers, 13 (2%) not allocated. 79 (12%) cases involved the transfer of the wrong site, which is 6% down on the last report. The remaining 88% of cases all relate to other forms of transfer errors. These include transfers where customers state that there has been no marketing contact with the transferring retailer, yet a transfer occurred anyway, or where there were mistakes or miscommunications about the description of a property leading to an incorrect transfer. A relatively large increase in Retailer 1 cases Retailer 1 cases increased by almost half - from 29 to 43 cases. This suggests that there may be a systemic problem with its internal transfer process. EWOV has notified Retailer 1 of this potential systemic issue. Despite a decrease, Retailer 7 still registered the most cases Although Retailer 7 s cases numbers reduced from 148 to 138 cases, a 7% decrease, it still registered the most number of cases in this category. Retailer 7 s high case numbers about this issue shows the positive correlation between the increase in its marketing activity and the associated risk of transfer errors. A decrease for Retailer 10 and Retailer 3 Retailer 10 and Retailer 3 cases markedly decreased. Retailer 3 cases fell by 30, from 115 to 85 cases and Retailer 10 cases fell by 21, from 27 to 6 cases. This may reflect an improvement in their internal customer transfer process

26 Cases by retailer and fuel Retailer 7 Retailer Retailer Retailer 11 Retailer Retailer Retailer Retailer 12 Not allocated Retailer Electricity Gas Dual Fuel Retailer 5 5 Retailer 9 3 Retailer 8 3 Retailer 14 1 Retailer 13 1 Retailer

27 Changes to retailer case numbers Company Enquiries and Referred Complaints Jan to June 2010 Investigated Complaints July to Jan to Dec 2009 June 2009 Total Total Total Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total See sample case studies on page

28 3.3 Contract Terms (1,285 cases) This issue category covers cases where a customer questions the terms of a contract. Sometimes, failure to draw attention to some contract terms leads to allegations that there wasn t explicit informed consent. Sometimes, the customer says they weren t given the information they should have been given prior to their account being transferred. Other customers allege misleading conduct in relation to contract terms such as a salesperson quoting different rates to the rates that subsequently appear on a bill. Case profile 1,285 cases, an increase of 86 cases (7%) from 1,199 in the previous six months. 1,111 enquiries and referred complaints, and 174 investigated complaints. 516 cases (40%) involving first tier retailers, 756 cases (59%) involving second tier retailers and 13 cases (1%) were not allocated. An increase in cases about termination fees Cases concerning complaints about termination fees rose from 898 to 968 cases, an 8% increase (70 cases). Retailer 7 makes up 46% of cases about termination fees and Retailer 7 and Retailer 6 combined make up 76% of these cases. Cases about termination fees are often secondary issues arising from other marketing and transfer complaints. For example, where a customer is misled into signing a contract and later finds that they will be charged a termination fee. The large number of termination fee cases registered to Retailer 7 may just be a reflection of the fact that it has the largest number of marketing and transfer cases overall. A big increase in Retailer 7 cases Retailer 7 experienced a massive increase in cases, up 258 cases (a 109% increase) from 236 to 494 cases. The vast majority of these cases (441 cases) are about termination fees. Retailer 7 and Retailer 6 combined contribute 65% of the total cases in this issue category. An increase in Retailer 3 cases Retailer 3 cases noticeably increased by 36 cases from 90 to 126, a 40% increase. This increase was caused by two re-occurring types of cases: Where customers have questions about the terms of a solar contract, particularly the Premium Feed-In Tariff, and; Where a customer did not receive a promotion offer. EWOV is collecting further information about this trend and analysing whether it is a systemic issue. Retailer 6 cases decreased significantly, but remain high Retailer 6 s cases in this category continue to decrease steeply. Cases are down by 156 (a 32% drop) from 492 to 336 cases, yet it still has the second highest number of cases after Retailer 7, the majority of which are about termination fees (295 cases)

29 Cases by retailer and fuel Retailer 7 Retailer 6 Retailer 3 Retailer 1 Retailer 12 Retailer 4 Retailer 11 Retailer 2 Not allocated Retailer 5 Retailer 10 Retailer 14 Retailer 13 Retailer Electricity Gas Dual Fuel Changes to retailer case numbers Company Enquiries and Referred Complaints Jan to June 2010 Investigated Complaints July to Jan to Dec 2009 June 2009 Total Total Total Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total 1, ,285 1,199 1,

30 Type of contract term issue EWOV categorises the type of contract term complaint in to four different sub-issues. Overwhelmingly, the main complaints continue to be about termination fees as this contract term has an immediate financial impact on a customer, in circumstances where it may be incorrect or unfair to charge one. The imposition of a termination fee is sometimes the sole trigger for a customer to call EWOV. This table shows each sub-issue distributed across the retailers. Company Green Energy Termination fee Variation price/terms Other Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total Total July to Dec 2009 Total Jan to June See sample case studies on page

31 3.4 Cooling-Off Rights (449 cases) These are cases where the customer said they cancelled the contract within the cooling-off period, but the transfer took place anyway. It also includes those cases where a customer was not told, or incorrectly advised, of the cooling off rights at the time of entering the contract. Case profile 449 cases, a decrease of 86 cases from the last six month period. 368 enquiries and referred complaints, and 81 investigated complaints. 114 cases (25%) involving first tier retailers, 327 (73%) involving second tier retailers and 8 (2%) were not allocated. 320 cases (71%) were about cooling-off rights not being actioned when a customer requests. After previous increases, Retailer 4, Retailer 1 and Retailer 6 cases decreased After experiencing a marked increase in the last report, Retailer 4 and Retailer 1 cases decreased this reporting period. Retailer 4 cases fell by 60 from 154 to 94 cases, a 39% decrease, and Retailer 1 cases fell by 28, from 94 to 66 cases, a 30% decrease. Both retailers however, remain prominent in this category having the second and third highest case numbers respectively. Also, after a reduction in the last report, Retailer 6 cases continue to decrease - a fall of 47 cases from 93 to 46 cases, which is a 50% reduction. In September 2009, EWOV registered systemic issues cases with these three retailers about their failure to action a customer s cooling-off right request when notified. The matter was referred to the ESC. Since then these retailers have identified and fixed the systemic problem. It may be that case numbers decreased as a direct result of this process. A sharp increase in Retailer 7 cases Retailer 7 cases in this category grew sharply and it now has the most cases about this issue. There was an increase of 58 cases from 63 to a 92% growth. The majority of cases are about cooling-off rights not being actioned. This may arise from a customer service issue at the call centre or a systemic issue with a retailer s internal cancellation process. EWOV is collecting further information about this trend and analysing whether it is a systemic issues

32 Cases by retailer and fuel Retailer Retailer Retailer Retailer Retailer 11 Retailer Electricity Gas Retailer Dual Fuel Not allocated 7 1 Retailer Retailer 10 5 Retailer Changes to retailer case numbers Company Enquiries and Referred Complaints Jan to June 2010 Investigated Complaints July to Jan to Dec 2009 June 2009 Total Total Total Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total

33 Type of cooling off issue EWOV categorises the type of cooling-off complaint in to four different sub-issues. The main type of complaint continues to be about a retailer not actioning a cooling-off request when asked by a customer. These types of cases may suggest systemic problems with a retailers contract cancellation procedure and could be avoided with process and system improvements. This table shows each sub-issue distributed across the retailers. Total July to Dec 2009 Total Jan to June 2009 Company Rights not actioned Rights not advised Other Total Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Not allocated Total Total July to Dec Total Jan to June See sample case studies on page

34 4. Marketing case studies Misleading C/2010/4592 Retailer 7 Investigated complaint received on 25 February 2010 and closed on 26 February 2010 Customer s statement The customer was dissatisfied with the misleading door-to-door marketing of a Retailer 7 representative. The marketer told the customer that he was visiting him as he was being overcharged. The customer assumed that the visit was about an ongoing high bill and solar complaint he had with Retailer 7. It was only later in the conversation that the customer realised he was being marketed an energy contract. He contacted Retailer 7 to complain about the misleading marketing, but was dissatisfied with its response. Outcome Retailer 7 apologised, applied a $78.27 credit to the account to recognise the inconvenience and conducted an audit of the marketer s conduct. The audit involved contacting the marketer s five previous sales customers about their marketing experience, monitoring the marketer s next five sales and providing an ongoing review of his performance. Potential compliance issues raised by this case Code of Conduct for Marketing Energy in Victoria 2009 (clauses 3.2 (a), 3.2(c)) Trade Practices Act 1974 (sections 52, 53) Fair Trading Act 1999 (sections 9, 12) C/2010/1211 Retailer 6 Investigated complaint received on 19 January 2010 and closed on 1 February 2010 Customer s statement The customer was dissatisfied with the misleading door-to-door marketing of a Retailer 6 representative. The customer s wife answered the door. The marketer offered the customer s wife a competitive tariff with a seven per cent discount on a two year contract. His wife signed the contract. When the first Retailer 6 bill arrived the customer found that the tariff rate was higher than informed during the marketing experience and there was not a seven per cent discount. Outcome Retailer 6 apologised, advised that the customer s wife was indeed quoted the wrong tariff rate and that this has been raised with the marketer, and retrospectively transferred the account to Retailer 3 without financial penalty. Retailer 6 also provided a direct contact should the customer have any further queries. Potential compliance issues raised by this case Code of Conduct for Marketing Energy in Victoria 2009 (clauses 3.2 (a), 3.2(c)) Trade Practices Act 1974 (sections 52, 53) Fair Trading Act 1999 (sections 9, 12)