Alinta fined $300,000 for signing up customers without consent
Alinta has been hit with a $300,000 fine after 15 customers were signed up without their knowledge or consent by salespeople working on its behalf.
An investigation by the Victorian Essential Services Commission (ESC) found the marketing and sales company that Alinta used to gain new customers instead created fake customers and switched people to Alinta without their consent in some instances.
This is the second time the retailer has been hit with a major fine for this issue. Alinta was fined $40,000 last month after two customers in South Australia were signed up to the company without their consent. The latest fine is the largest ever handed down by the ESC.
In Victoria, Alinta used the services of the Appco Group, which is affiliated with the Hong Kong-based multi-level marketing company the Cobra Group.
Appco hired sales and marketing company Playfair Co as its agent to go door-to-door and convince customers to switch their electricity providers.
Alinta said it first realised there was a problem when it received a complaint in mid-September 2016 from a customer who said their electricity retailer had been switched to Alinta without their consent or knowledge.
An Alinta spokesman said the company then carried out an internal review, which found the customer had never officially signed on to the energy retailer and shouldn’t have existed on its system.
After an internal investigation, Alinta found one Playfair salesperson had created fake customers using real addresses, or signed up real people without their consent to boost their sales commissions.
They obtained these details by asking to see the homeowners' bills, where they could obtain the national metering identifier (NMI) number, which is the main piece of information needed to switch retailers. Once they had this NMI, they could change electricity retailers without the consent of the home owner or those paying the bills.
In most cases, the customer transfers were reversed before bills were issued.
The Alinta investigation found a total of 15 instances of fake customers or account switches without consent.
Alinta approached Victoria’s ESC on September 30, 2016 with its findings. The company then did a deeper investigation into Appco and Playfair to find out if there was a core group of salespeople involved or whether it was a systemic issue.
An Alinta spokesman said the investigation found evidence of another two door-to-door salespeople at Playfair committing fraud. Those involved were immediately fired and the case was referred to police.
“Importantly, there was no financial loss to any of these customers as the system picked up these fraudulent events before they became active,” the spokesman said.
Alinta Energy’s executive director of retail markets, Jim Galvin, said the behaviour of the individuals involved was reprehensible.
“In 2016, we notified the ESC that employees of a supplier of ours had defrauded the company and our customers. We then apologised to the affected customers, quickly fixed the issue, and improved our compliance framework," Mr Galvin said.
“At the moment, we estimate that we are doing roughly double the gross sales of our competitors, as Victorians respond to our competitive pricing. We absolutely know that, for our customers, no instance of misinformation, poor behaviour or non-compliance is acceptable."
Victorian ESC chairman Ron Ben-David said electricity retailers were legally responsible for the actions of agents working on their behalf.
“Energy companies must disclose contract information in plain English, they must know that the customer is capable of giving consent and they must obtain that consent in writing or verbally," Mr Ben-David said. “They must also be able to verify any spoken consent."
Appco told Fairfax Media the matter was between Alinta and the regulator. Playfair was approached for comment.
A history of conduct
This is not the first time Appco workers or agents have faced allegations of misleading and deceptive conduct. In 2013, the Australian Competition and Consumer Commission ordered Australian Power and Gas Company (APG) to pay a penalty of $1.1 million for “illegal door-to-door” selling practices.
Appco and Aegis Services Australia were the two companies carrying out the sales.
“The court declared that APG, through the conduct of certain sales representatives acting on its behalf, made false or misleading representations while calling on consumers at their homes for the purpose of negotiating agreements for the supply of retail electricity and/or gas by APG,” the ACCC said at the time.
“The court also declared that APG, by the conduct of one of its contracted sales representatives, engaged in unconscionable conduct during a door to door sale involving a consumer from a non-English speaking background with very limited English reading/writing skills.”
Appco had a stake of about 20 per cent in APG.
The incidents involving Alinta occurred around the same time as Appco was facing an $85 million class action by former charity collection employees. The former workers claimed they were paid around a third of minimum wage, forced to work 80-hour weeks and faced bullying and ritualised shaming when they failed to hit sales targets.
The latest penalty comes after Alinta was found in June to have advertised misleading electricity price discounts for power bills. Between December 2017 and February 2018, Alinta advertised its discounts and power bill savings as being greater than those of other electricity retailers - but it compared these discounts to its competitors' undiscounted offers instead of similar deals.