Avoiding unethical sales practices that could cost you dearly

While competition drives many of us to be at our best, it also tends to bring out the worst in some. The same is true for the deregulated energy market.

Though most energy brokers and suppliers compete on your behalf to offer favorable pricing and contract terms, there are a handful of scammers out there using deceptive methods to steal your business. This illegal practice of switching your electricity supplier without consent is commonly known as “slamming.” The result can be electricity rates that are more than double what you should be paying and large exit fees for abandoning your current contract.

Smart Business spoke with Roger Zona, president and founder of TPI Efficiency, to learn more about what slamming is, how to recognize it and how affected companies can be made whole if it happens to them.

How does slamming happen?

Sometimes it’s an honest mistake or human error, though in many cases, unethical sales practices are the cause.

One common method is a phone call or mailer from someone claiming to be your existing electricity broker or supplier. The slammer will request some basic account information to confirm that you are eligible for a special offer or promotional rate. However, they are actually gathering your personal information to set you up with a different supplier.

In another variation, slammers will ask for the account number on your electricity bill pretending to process a standard quote for service from a new provider. Instead of coming back with a quote, the scammer uses your information to approve a new contract, and then fraudulently signs for it.

What is the result of being slammed?

The most typical results of being slammed are significantly increased rates, cancellation penalties from your existing agreement and general confusion about energy expenses. Some of the liquidated damage penalties can result in thousands of dollars in fees.

How can companies avoid being slammed?

As a general rule of thumb, don’t give your account numbers or information contained in utility bills to anyone unfamiliar. Know whom you are talking to. Always ask for contract terms in writing and, while it may sound elementary, be sure to read any agreements thoroughly before signing. Finally, always keep a copy of these agreements for your records, even if you have signed up over the phone or the internet.

Utilizing a Public Utilities Commission certified broker is also a good way to navigate the deregulated energy space. Be sure to do your research and keep an up-to-date record of their information including name, phone number and email address.

What recourse do slammed companies have to be made whole again?

Immediately file a complaint with your Public Utilities Commission if slamming has occurred. Refer to any protocols in place within your state administrative code regarding how slamming complaints must be handled.

Electricity customers may also call their previous supplier to get the issue corrected. There are provisions from the state that can allow for the credit or refund of any damages and re-enrollment to your original contract.

Affected companies must act quickly once they discover they’ve been slammed. Most electricity suppliers provide a 14-day window to address the issue without penalty. After that period, the process of correcting the problem becomes a bit more challenging, but can still be resolved.

In the end, you want to be protective of your utility information. Research who you’re doing business with. Designate time each quarter to make sure the utility programs you originally established are still in place. Instruct the people who pay your utility bills to notify company executives if rates suddenly change or the current supplier is unexpectedly dropped. Also, consider working with an energy consulting company to aid you in managing these expenses. They have representatives who constantly monitor accounts for suspicious activity and work to correct problems the moment they occur.

Insights Energy Solutions is brought to you by TPI Efficiency Consulting