An Australian energy retailer has paid a $10,800 fine after the Australian Competitor and Consumer Commission issued an infringement notice following concerns it was not accurately representing the cause of price increases.
Lumo Energy is an independent energy and gas retailer based primarily in New South Wales and Victoria. According to the ACCC, in February 2016 call centre staff at the company made representations to a number of customers about the company’s recent increases in retail gas tariffs.
The staff blamed the increases on the Australian Energy Regulator, but the watchdog says the price increase were actually due to commercial decisions made by Lumo.
In light of this, the ACCC found reasonable grounds to believe Lumo was in contravention of Australian Consumer Law (ACL) with respect to making false and misleading representations to consumers.
Although the payment of a penalty is not considered an admission of a contravention of consumer law, ACCC chairman Rod Sims was critical of Lumo’s practices.
“It’s important that energy retailers take responsibility for their commercial decisions, especially those which may be detrimental to consumers, rather than attempting to shift blame onto regulatory organisations like the AER,” Sims said in a statement.
“Energy customers rely on retailers to provide accurate information. Consumers are entitled to make informed decisions about their energy use and choice of provider.”
Tony Mylne, commercial law partner at TressCox Lawyers, praised the ACCC for its actions, telling SmartCompany the issuing of the infringement notice was an efficient way of operating.
“They’ve essentially caught the business red handed, and said ‘Do you really want us to go through the process of prosecution?’” Mylne says.
“It’s a very efficient way of doing things and it brings quick results.”
Despite the fines not having “big dollars” involved, Mylne says infringement notices can keep companies on their toes when it comes to what staff say to customers.
“There should have been a system in place to make sure the representations being made by public facing staff are going down through upper management,” he says.
“The company should have ensured their employees are keeping face in terms of customer issues, and make sure they’re not misleading people under the ACL.”
Mylne acknowledges this can be a “difficult role” for managers, but notes it is essential staff are doing the right thing, especially when hefty fines are on the table.
Lumo trying to “bamboozle” customers
Sue Barrett, managing director of Barrett Sales Training, Sue Barrett believes Lumo’s sales claims could be a case of “confusion marketing” in an attempt to “bamboozle” consumers.
“If you want to run a good business and create excellent customer experiences, this is not the way to do it,” Barrett told SmartCompany.
For businesses dealing with staff that conduct sales, Barrett advises strong directives from management to ensure misrepresentations don’t occur.
“If you’re going to put forward any new changes to staff, it should come in a clear statement of representation from senior management. It might not be an easy conversation to have with customers, so management should also provide strategies in how to conduct themselves if customers object,” she says.
And if a staff member starts to make misrepresentations despite these actions, Barrett says management should not hesitate to act.
“If someone goes off the rails, management should jump on that quick smart. It should be halted and not condoned.”
SmartCompany contacted Lumo Energy Australia but did not receive a response prior to publication.