In recent months, there have been numerous reports of energy brokers targeting businesses with deceptive tactics. This trend has increased following widespread staff layoffs. In several cases, former employees have taken confidential information with them. They use this information to approach new clients. The deals they offer may appear enticing at first. However, these deals are often designed to trap businesses in expensive contracts.
The Risk of Deceptive Energy Practices by Energy Brokers
If you’re locked into a long-term energy contract, you’re likely in a secure position. For instance, if your contract is secured until 31 December 2028 and you’ve locked in rates that are at least 30% lower than the current market rate, then you’ve made a smart decision for your business. However, this doesn’t mean you’re safe from deceptive tactics.
Recently, several of our clients have been approached by individuals who have left their previous employers in the energy sector. These individuals, often armed with sensitive information about businesses, are using it to mislead and misrepresent their services, convincing businesses to sign new agreements that benefit the retailer, not the client.
A Case of Misleading Authority
Just last month, one of our clients was misled into signing what seemed like a simple Letter of Authority (LoA). The client, believing they were simply granting permission to discuss their account, was unaware that by signing the document, they had inadvertently transferred their energy supply to a different provider. This action resulted in a termination fee of $97,000, in addition to a five-year service contract costing $10,000 annually.
Upon investigating, the Power Maintenance Energy team, discovered that a large, well-known energy company had used individuals with no real understanding of the energy industry to convince our client to sign the LoA. Despite their claims to be energy experts, these individuals lacked any genuine industry experience and used misleading language to misrepresent the consequences of signing the agreement.
The Fine Print and Legal Pitfalls
Even worse, the fine print of the LoA protected the energy retailer from any legal repercussions. This has placed the client in a difficult and costly legal battle, as the terms of the agreement effectively prevent any easy resolution. The energy company involved claimed to follow the “National Customer Code,” but in reality, the code offers little genuine protection for businesses facing deceptive tactics.
Unfortunately, when we raised the issue with the Australian Competition and Consumer Commission (ACCC), they failed to take action. It’s a disappointing reality that many of the companies engaging in these practices are also sitting on the boards of the very customer codes they are abusing. At one point, I was even approached to lead the board, but I refused, as the commitment to ethical behaviour was clearly lacking.
Protect Your Business from Deceptive Practices
It’s crucial to be cautious when approached by any energy retailer. If you’ve already locked in a favourable long-term contract, it’s best to ignore unsolicited offers. Some individuals may claim they have a better deal.
Many of these tactics appear harmless at first glance. In reality, they could lead to serious financial consequences for your business.
To help protect your business, always be sure to:
- Verify all documentation: Before signing anything, read the fine print and ensure you fully understand the terms of the agreement.
- Avoid signing unsolicited Letters of Authority: These documents can be used to transfer your account to another provider without your knowledge.
- Consult an expert: If in doubt, seek advice from a trusted energy broker or professional to review any contract changes before you commit.
- Report unethical practices: If you believe you’ve been misled, report the issue to the ACCC or your state’s consumer protection agency.
By remaining vigilant and informed, your business can avoid falling victim to misleading tactics that could jeopardise your energy security. If you need guidance on your current contract or want to ensure you’re getting the best deal, don’t hesitate to get in touch. We’re here to help you make the right choices for your business’s energy needs.
Thoughts from Nick Halaris, Managing Director and Experienced Energy Broker
“At Power Maintenance, we understand the importance of securing the right energy contract and protecting businesses from deceptive practices. Energy contracts are long-term commitments, and it’s crucial that businesses stay informed and work with trusted professionals to navigate the complexities of the energy market. We are committed to ensuring our clients make informed decisions that provide long-term value and security.“
Need help reviewing your energy contract? Let us know!
