Energy Company Receives Massive Fine for Unethical Door-to-Door Sales
Sumo, a power and gas company, has been fined $10 million (US$6.4 million) for engaging in door-to-door sales, the largest penalty ever for violations of one state’s energy laws.
Despite regulations prohibiting companies from approaching customers at home to discuss contracts without consent, Sumo confessed to doing so nearly 6000 times between January and August 2022.
The Essential Services Commission took legal action in the Supreme Court, with a verdict delivered on Dec. 6 detailing two incidents involving agents selling Sumo contracts.
In one case, an agent falsely claimed he was installing a free energy-saving device from the government to an 86-year-old woman, who ended up being enrolled in a Sumo energy plan. Another incident involved a 29-year-old man who thought he was signing up for a quote but unknowingly signed up for gas and power services.
The court acknowledged deliberate deception by the agents in their interactions with customers.
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Sumo, however, was unaware of the deception and did not condone or encourage it.
The court found that Sumo mistakenly believed its actions were lawful as the doorknocking was initially linked to an energy-efficient program.
Justice Michael Osborne noted, “Sumo now realizes that its understanding was incorrect.”
Some customers struggled for up to three months to terminate their agreements, resulting in stress and inconvenience.
Additionally, Sumo failed to properly review the best offers for 60,000 customers and neglected to inform them of superior deals.
Despite having less than a two percent market share, Sumo cooperated fully, acknowledged its liability early on, and these factors were taken into account in determining the penalty.
The total fine amounts to $10 million, along with an extra $900,000 (US$580,000) in costs and other penalties, which Sumo can pay in installments.
This penalty stands as the largest ever imposed for breaches of the state’s energy laws, according to the commission.
Commission Chairperson Gerard Brody expressed hope that this penalty would serve as a strong message to all energy companies that enforcement measures would be rigorously enforced.
