$7 Million for Misleading Door-to-Door Water Heater Sales

$7 Million for Misleading Door-to-Door Water Heater Sales

Postby CLS » Wed Nov 26, 2014 6:02 pm

The Competition Bureau has announced that National Home Services will pay a total of $7 Million---$1.5 Million in restitution, a $5 Million penalty, and $500,000 toward the Bureau's investigative costs---pursuant to a consent agreement related to National's misleading door-to-door tactics with regard to water heater sales. From the Bureau's website (http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03849.html):

"National Home Services to pay $7 million for misleading door-to-door water heater promotions

Agreement includes money back to Ontario and Quebec consumers

November 24, 2014 — OTTAWA, ON — Competition Bureau

The Competition Bureau has determined that sales agents for National Energy Corporation (National) were making false or misleading representations regarding their identity and the purpose of their visit to the customers’ homes. During the course of the investigation, the Bureau became aware of thousands of complaints received by other organizations, including the Ontario Ministry of Consumer Services, the Better Business Bureau and the Office de la protection du consommateur in Quebec.

To address the Bureau’s concern, National and Just Energy Group Inc. have signed a consent agreement that:

Provides $1.5 million in restitution to be paid by National to all current National customers obtained through door-to-door marketing since July 2008 in the form of a direct credit on their water heater rental bills;
Prohibits National from misleading consumers into believing that their existing water heater is unsafe or that is eligible for a no-cost upgrade;
Requires the payment of a $5 million administrative monetary penalty, and an additional $500,000 towards the Bureau’s investigative costs; and
Requires the implementation of a Corporate Compliance Program.

As part of the Consent Agreement, National is also required to put in place and pay for an independent compliance monitor, whose role will include, among other things, monitoring and reporting on:

complaints related to false or misleading representations and deceptive marketing practices;
compliance related to National’s sales, training and promotional materials and its door-to-door sales process; and
the implementation of National’s compliance program.

National cooperated with the Bureau throughout the investigation.

In an effort to protect Canadians, the Bureau has been and continues to be active in the water heater industry by taking a number of enforcement actions to ensure that businesses comply with the Competition Act. Recent actions in this area include:

The Bureau filed applications with the Competition Tribunal against Reliance Comfort Limited Partnership (Reliance) and Direct Energy Marketing Limited (Direct Energy) in 2012 alleging that they had implemented anti-competitive water heater return policies and procedures that were aimed at preventing consumers from switching to competitors.
Under the terms of a consent agreement announced on November 6, 2014, Reliance paid an administrative monetary penalty of $5 million and contributed $500,000 to the Bureau’s investigative costs. Reliance was also required to take certain steps to make it easier for customers to terminate their rental agreements and return their water heaters to Reliance.
After learning of EnerCare Inc.’s plan to acquire Direct Energy’s water heater rental business in Ontario, the Bureau obtained a commitment from EnerCare that would put an end to Direct Energy’s anti-competitive policies and practices following the completion of the transaction.
While Reliance and EnerCare have cooperated with the Bureau, the Bureau’s litigation against Direct Energy is continuing before the Tribunal. The Bureau is seeking an order that includes, among other things, an AMP of $15 million.
On November 17, 2014, the Bureau cleared Reliance’s acquisition of National, subject to the terms of the consent agreement reached between the Bureau and Reliance, announced on November 6, 2014.

Quick facts

National, operating as National Home Services and Services aux foyers, is a subsidiary of Just Energy Group Inc.
National, operating as National Home Services and Services aux foyers, is a subsidiary of Just Energy Group Inc.
The Bureau continues to investigate alleged deceptive door-to-door marketing practices by other water heater providers.

Quotes

""Consumers rightfully deserve the truth when choosing service providers for essential goods, such as water heaters. The Bureau is pleased that this agreement will protect consumers from being deceived by representatives of businesses who falsely identify themselves in order to make a profit. This type of behaviour will not be tolerated by the Bureau, and we will not hesitate to hold those responsible accountable for their actions. Our important work in this area continues.""

John Pecman,
Commissioner of Competition"

This is an issue that has long plagued consumers, who should continue to be wary of people coming door-to-door trying to sell them a water heater (or any other service or product that they are not certain that they actually need). This also reaffirms that it does pay to complain to agencies and ministries having oversight and regulatory powers in consumer and fraud matters---these complaints do get heard and investigated!
Kathryn M. Bullon, B.Sc., J.D., M.Ad.Ed.
Legal Education Co-Coordinator
Community Law School
CLS
Site Admin
 
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