Energy America agrees to customer refunds and changes to its marketing tactics

LANSING, Mich., July 26, 2002 — Attorney General Jennifer M. Granholm recently announced that Energy America, North America’s largest unregulated energy wholesale company, will pay refunds to consumers, reform its marketing practices, and pay the state’s costs for its alleged violations of the Michigan Consumer Protection Act.

In a legally binding Assurance of Voluntary Compliance signed yesterday, Energy America agreed to de-enroll customers who allege that they have not authorized the company to sign them up for natural gas service unless the company can establish by “clear and convincing evidence” that the consumers’ allegations are invalid.

Unauthorized consumer contracts will be cancelled and refunds will be issued for the difference between Energy America’s gas rate and the rate the consumer’s previous gas supplier had charged. In addition to consumer refunds, the Toronto-based company has agreed to reimburse the State of Michigan $250,000 for the costs of examining consumer complaints and negotiating the settlement. The company has also agreed to pay a $100,000 civil penalty if it fails to comply with the Assurance in the future.

Granholm said: “In recently’s marketplace, corporate responsibility is a hot commodity. Michigan consumers simply won’t stand for deceptive business practices, and neither will this office. We simply don’t mess around when it comes to cracking down on companies who don’t follow Michigan law.”

She added: “This is great news for Michigan consumers. The settlement with Energy America adds to the more than $10 million my office will have put back into consumers’ wallets this year alone.”

Through the Assurance, the company has agreed to address complaints filed with the Attorney General’s office. Customers who filed complaints with the Michigan Public Service Commission will also be entitled to potential refunds and de-enrollment under the agreement.

Customers still wishing to file a complaint with the Attorney General’s office should contact the Consumer Protection Division at 877-SOLVE-88 (877-765-8388) or . Customers with questions about obtaining refunds should contact Energy America. The company has recently paid more than $25,000 in refunds to Michigan customers.

Granholm added: “With giant size comes giant responsibility. As one of North America’s largest natural gas companies, Energy America needs to lead its industry through sound business principles grounded in fairness. Energy America deserves credit for making strides in reforming the way it does business, but we’ll be vigilant in monitoring the company’s future conduct.”

Energy America will take steps to ensure that its door-to-door solicitations are lawful, including promptly leaving a consumer’s home at a consumer’s request, complying with a consumer’s request to avoid further solicitation, and not soliciting where a posted notice against solicitors can be seen. The company has agreed that it will not continue a sales presentation when the consumer, through disability, illiteracy, or other vulnerability, is clearly unable to understand the terms of the offer.

After receiving more than 600 consumer complaints from across the state about Energy America’s marketing practices, Granholm began negotiating with Energy America in March to bring them into compliance with state law. Consumers complained that the company had used misleading solicitation tactics including misrepresenting the amount of savings consumers would receive and not clearly explaining the purpose and effect of a consumer’s signature on Energy America contracts.

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