Caveat Emptor: Pushy Energy Salespeople Can be Bad News

Beware of Energy Contracts and Home Heating Scams – they have become all too common in Ontario

An Angus Reid survey of Ontario homeowners revealed some startling statistics about their experiences with door-to-door sales in the province:

  • 58% felt pressured into making a purchase or signing a contract
  • 61% who bought experienced “buyer’s remorse”, and regretted signing a contract
  • 70% feel angry about getting burned at the door

Surprisingly, 41% of  respondents said they were letting door-to-door salespeople inside their homes, listening to sales pitches without requesting a valid company ID and allowing salespeople to view personal bills containing private information.

CARP has received many complaints about door-to-door energy sales tactics. When a salesperson comes to your door selling an energy product – be it a fixed-rate energy contract or water heaters and furnaces, you need to be on your guard. We have heard from people who have been scammed in a number of ways that might surprise you, but a simple internet search will turn up hundreds of similar stories. Here are a few of the tactics members have told us about:

• A salesperson will come to your door claiming that they want to ensure you receive an energy discount on your utility bill. They will ask to see your bill to show you where you could be realizing savings. Once you show them your bill, they note your account number and ask you to sign a release that will ensure you get your rebate. At this point, if you are dealing with a scammer, what you are in fact signing is a long-term fixed-rate energy contract. There are reports of people who have seen their utility bills double after signing such a release. They also find it next to impossible to cancel the contract. Some people estimate that after five years of being locked in to the contract, they will have paid out over $10, 000 more than they would have paid if they had stayed with their public utility!

• You receive a cheque in the mail and assume it is some sort of rebate from your utility. What you don’t see is the very fine print that says that by cashing the cheque, you are agreeing to a contract with a certain energy company. Some people have been surprised to see their energy costs increase after cashing such a cheque.

• A person comes to your door and gives you the impression that they are with your furnace service provider. They say they are there to provide routine maintenance. They tell you your furnace is at risk and turn it off, or they send a technician to turn it off. They then tell you that you need to purchase a new one. One member has even had a technician from the company he had signed up with turn off his furnace in the dead of winter and claim it needed to be replaced, to the tune of thousands of dollars. He contacted an independent technician who could see nothing wrong with his furnace.

• Someone calls you and asks you to enter into a fixed-rate agreement that will generate savings,. If you even vaguely agree to consider it, they sign you up. Cancelling the contract proves very difficult. One consumer who said he would consider the offer claims that he called the company, which refused to cancel, saying that he had agreed. He asked for a recording of his verbal agreement and the company has stalled and stalled. In the meantime he is paying the increased energy costs.

These are just a sampling of the complaints CARP and other consumer protection organizations have received. So far, reports of this happening have surfaced in Manitoba, Alberta, British Columbia and Ontario. The majority of complaints seem to be coming from high-density areas in Ontario and British Columbia – most likely where the energy companies are focusing their door-to-door efforts because of the population clusters. The higher the numbers, the more likely they are to catch someone who is unaware, vulnerable or distracted. Although there are instances where contracts could save you money, you should always be on your guard. An independent review by CBC’s Marketplace revealed that when comparing retailers to the public utility in Ontario, 56 per cent of consumers would have saved by locking into their gas rates, whereas 44 per cent would have lost money. HOWEVER, when it came to electricity rates, 100 per cent of Ontario consumers would have lost money with even the best retailer rate, when compared to the public utility.

What can you do to protect yourself?

1. If you are alone or intimidated, do not feel that you have to open the door to be polite. You have the right not to answer. If the person persists, you have the right to call the police. If you do answer the door, always ask to see identification from someone who comes to your door: ask which company they are from and write down all of the person’s information, including their name, the company they represent, time and date of visit and the company’s energy board licence number.

2. Be vigilant and do not let someone pressure you and intimidate you. Remember that it is not that likely that someone will go out of their way to come to your door only to save you money. They stand to gain from your agreement/your signing that contract, so they will tell you it is time-sensitive. They may even scare you, but don’t cave into the pressure. You have the right to ask them to leave documentation so that you can consider their offer and inform yourself. If the offer is legitimate, there is no reason this should be a problem.

3. You are under no obligation to show a copy of your electricity or natural gas bill to a sales agent. However, if you do want to enter into a contract, the agent will need to see a copy of your bill to get your utility account number in order to process the contract. Treat the information on your energy bill with the same confidentiality as you would for your credit card bill. Only show it when you are ready to sign a contract. Do not sign a contract until you have researched your options and read all of the fine print: you can’t rely on any verbal promises made by salespeople unless those promises are also in the contract’s terms and conditions.

4. Know your rights: If you feel pressured into signing a contract, just say no. If you signed a contract and felt you were misled – or were switched to a different provider without your permission – act immediately and file a complaint with your province’s consumer protection branch. You have as little as 10 days to exit your contract without penalty. BUT BE AWARE that people who have tried to exit contracts within the allocated 10-day period have found the energy companies to be both evasive and elusive. There are many accounts of stalling that have resulted in the consumer being unable to cancel within the ten-day period. After that, you have less recourse to cancel the contract and it can be very difficult, time consuming and even costly to do so. CBC Marketplace has created a list of pertinent documents for various provinces: Read more

5. Do your homework and shop around In Ontario, if you buy electricity from your utility the price is set by the Ontario Energy Board (OEB) and is subject to adjustment every six months. This is known as the price-regulated plan. If you buy natural gas from your utility, the prices are regulated by the OEB and can change every three months. If you buy from an electricity retailer or natural gas marketer, the price is stated in your contract and is usually fixed for a number of years. The OEB licenses these companies but does not regulate the prices they offer. You can access historic electricity and natural gas rates charged by utilities, as set by the OEB by going to its website. Always do some background research on a company you are considering signing with to see if they have a history of consumer complaints, and to see how they handle and resolve them. Learn how to conserve energy, and consider investing in an energy audit of your home to learn how you can improve energy efficiency, like caulking and weather stripping, or changing windows and furnaces.

Other Tactics Used by Some Unscrupulous Salespeople…

What They May Tell You

Some door-to-door sales agents employ unscrupulous tactics when it comes to trying to make a sale. Below are examples of misleading practices some door-to-door salespeople employ.

  • Telling you that your current provider is no longer in business and they are taking over the contract and service of your water heater
  • Dressing as a technician and saying they’re in the neighborhood to schedule water heater replacements
  • Implying they represent the government or a utility
  • Showing you safety bulletins implying your water heater isn’t safe anymore and that you have to replace it
  • Telling you incorrectly that if your water heater is over a certain age, it’s inefficient
  • Showing you pictures of water heaters cut in half to show corrosion inside, implying your water heater is in the same condition
  • Citing savings of up to 30% that only applies when switching from electric to gas
  • Describing a locked-in term as a “guarantee and maintenance plan”

What They May Not Tell You

  • Who they are working for
  • That you may be locked into a long-term contract
  • If you try to break the contract there may be high exit fees
  • That their rental rates are higher than your current provider
  • Significant energy savings may only apply if a customer converts from an electric water heater to a natural gas water heater
  • Even replacing a 15 year-old water heater will only save about $6.30 a month in energy costs, before you even consider the cost of the water heater1
  • Water heaters are designed to work for years without accumulating rust buildup
  • Water heaters are installed according to the code at the time of installation

New Legislation May be in the Works

The province of Ontario has said that it intends to develop additional legislation to protect consumers from pushy door-to-door sales people.  The legislation has been yet to been introduced but it you are interested in finding out more about what the new protections would offer consumers (one of the reforms would include increasing the “cool off period” from 10 days to 20 days),  you can find out more about the proposal by visiting the Government of Ontario website.