ACCC launches legal action against energy broker Energy Watch over comparison confusion
The Australian Competition and Consumer Commission (ACCC) is seeking an injunction against energy broker Energy Watch and its founder Ben Polis, alleging the company made false or misleading representations in its advertising.
The ACCC alleges that Energy Watch claims to compare rates across all energy retailers, when in reality it works with preferred suppliers to secure low rates, collecting a commission for the service.
The competition regulator also objects to Energy Watch presenting average savings over a two-year period.
But Energy Watch founder Ben Polis has defended his company from the ACCC's claims.
"We're defending all the allegations which are 100% not true," Polis told SmartCompany this morning.
He said that though Energy Watch has been called a comparison site by others, it has always claimed to be an energy broker.
Polis says the Energy Watch leverages its large customer base to secure low prices from specific energy companies. It doesn't charge customers for this service, making its money from the commissions from energy companies with which it has agreements.
He also disputes the claim that Energy Watch doesn't compare everyone's rates, saying operators have rates from all electricity companies on hand.
But he said that callers are not offered a selection of rates, as they are only after the cheapest one and due to Energy Watch's agreements, the cheapest deal is usually from the company Energy Watch has partnered with.
Polis says the average money saved is shown over a two-year period because that is the minimum time that electricity contracts lock customers in for.
"The electricity ombudsman in New South Wales and Victoria have looked at our rates and found we save people a bit more actually," he said.
But Victorian Greens MP Greg partner Barber says customers can be confused by the way Energy Watch promotes its services.
"If you go on Energy Watch's website, you actually can't see a list of the companies that they partner with. If you watched their ads you'd think they served all companies. And of course, they get a bounty [for everyone they sign up]."
Barber compared Energy Watch to competitor Switchwise, which does provide a list of their suppliers on their website.
Barber also says customers may be confused with British Energy Watch, which is the watchdog for the industry.
Polis rejects that he should be penalised for this, saying he didn't even know about the UK website when he founded his business.
Barber said he has been to see the Victorian utilities regulator, the Essential Service Commissioner, who is currently seeking legal advice on whether electricity brokers and comparison sites should be retail marketing groups and therefore subject to regulation by the Commissioner.
This would place additional scrutiny on the sector in addition to the general consumer protections offered by the ACCC. Barber said in the long-term he would like to see them regulated under the Victorian commission.
"It's a tougher tool," he says.
It's not the first time Energy Watch advertising has caused friction with regulators.
Earlier this month, an ad was banned by the Advertising Standards Bureau which the ABS ruled racially stereotyped Indian people as dishonest door-knockers.
The setbacks for the company follow on from its unveiling last week of a lucrative $5.7 million sponsorship deal with AFL club Melbourne.