Power and gas company Sumo will fork out $10 million (US$6.4 million) for door-to-door sales in the largest ever penalty for breaches of one state’s energy laws.
Companies are banned from calling on a customer at home to negotiate contracts without their direct consent, but Sumo admitted to doing so almost 6000 times between January and August 2022.
The Essential Services Commission initiated Supreme Court action, with a judgment released on Dec. 6 detailing two “isolated episodes” involving two agents selling Sumo contacts.
One agent told an 86-year-old woman he was installing a free energy-saving device from the Victorian government, however she was then signed up for a Sumo energy plan.
Another agent approached a 29-year-old man who was “assured” he was signing up for a quote, but his signature was used to sign him up for gas and power, an incident that took place before the doorknocking ban came into effect.
“The parties accept and submit that the contravening conduct involved deliberate deceptiveness by the (agent) in what was said to (the customers),” it stated.
“However, Sumo was not aware of the deception, and the deception was not encouraged or condoned by Sumo.”
The Supreme Court found Sumo erroneously believed its procedures were above board as the initial purpose of the 6000 doorknocks were related to an energy-efficient upgrade program.
“Sumo now accepts that its understanding was wrong,” Justice Michael Osborne said in his judgment.
It took some customers up to three months to cancel their contracts, causing “stress and inconvenience.”
The company also incorrectly checked best available offers for 60,000 customers and failed to alert them of the best deals.
It was noted Sumo is a small player with less than two percent of market share, and it had fully co-operated and acknowledged liability early on, which were factored into the penalty.
Total fines are $10 million with an additional $900,000 (US$580,000) in costs and other penalties, which the company can pay in instalments.
The penalty is the largest ever imposed for breaches of the state’s energy laws, according to the commission.
The commission’s chairperson Gerard Brody said he hoped the penalty sends a strong message to all energy businesses that it will use the full range of enforcement options to hold them to account.
