ACM warns against telemarketing practices involving authorizations for energy contracts
Summary
- ACM warns against telemarketing practices involving energy contracts in which authorizations are used.
- Consumers and businesses that have signed authorizations can, without their knowledge, be switched to different energy suppliers.
- ACM advises never to agree to signing an authorization over the phone, especially not during an unsolicited phone call.
The Netherlands Authority for Consumers and Markets (ACM) is warning consumers and businesses against the risks of telemarketing calls involving energy contracts, in which authorizations are used. In this method, sellers ask consumers and businesses during the calls to sign authorizations with which they can take out energy contracts on behalf of those consumers and businesses. As a result, consumers and businesses often fall victim to unwanted switches and high fees if they wish to undo those switches.
An ACM study has revealed that, over the past year, one in four households has been contacted over the phone about taking out energy contracts. Almost half of these consumers felt pressured in such calls to accept the offers. ACM also receives many complaints from independent contractors (self-employed workers) and other businesses that receive calls about taking out energy contracts. In that context, many businesses indicate that, in those calls, authorizations were used, with which energy contracts were taken out from energy suppliers on their behalf.
Manon Leijten, Member of the Board of ACM, adds: “Taking out an energy contract is complicated enough as it is. Energy contracts are important and complex products, which are not suited for being sold over the phone. Telemarketing sales where authorizations are used increase the risk of deception even further. We are seeing that, as a result thereof, consumers and businesses are often stuck with contracts they did not consciously choose.”
Businesses need to be extra alert
ACM emphasizes that it is not just consumers that are regularly approached by telemarketers: businesses are approached just as much. Businesses need to be extra alert because they do not enjoy the same legal protections as do consumers. For example, the right to a cooling-off period does not apply to businesses. As a result, they run a higher risk of unwanted contracts. Independent contractors that take out energy contracts for their home addresses must be offered consumer energy contracts, and are, in fact, entitled to a cooling-off period.
The risks of authorizations
When signing an authorization, the consumer or business in question gives the seller permission to take out an energy contract independently. This carries significant risks:
- Unwanted switches: Customers have no control over the choice of supplier, and are sometimes, without their knowledge, switched to different energy suppliers.
- Incorrect or incomplete information: Sellers often do not properly inform consumers about what authorizations entail, and do not provide information about early-termination fees that are charged by the old and new suppliers.
- High fines: Sellers often wrongfully impose high fines for revoking authorizations, on top of the early-termination fees of energy suppliers.
The use of authorizations is not prohibited, and it can be useful in situations where someone is acting on behalf of someone who is no longer capable of doing so themselves due to, for example, illness or absence. Authorizations are not meant for telemarketers that wish to take out energy contracts on behalf of consumers or businesses. That is why ACM advises never to agree to signing authorizations over the phone, especially not during unsolicited calls. Have you already signed an authorization? If so, you can revoke it at any time. Has the seller imposed a fine, and have you not been informed properly about this? Visit the website of ACM’s consumer information portal ACM ConsuWijzer for tips and more information: Annulling or cancelling an energy contract | ACM ConsuWijzer (in Dutch).
Previous warnings about telemarketing practices
ACM has, on many occasions already, issued warnings about the risks of telemarketing practices involving energy contracts. Energy contracts are complicated products that you should not take out over phone calls (unsolicited or otherwise). That is why ACM has already often argued in favor of banning telemarketing practices involving energy contracts. Experience has shown that energy contracts that are sold over phone calls are never really the best offers for consumers and businesses.
ACM’s investigation
This year, ACM reminded businesses that use telemarketing practices when selling telecom contracts and energy contracts of the stricter guidelines as well as of the ban on calling consumers and independent contractors without consent. ACM is currently investigating these businesses in order to check whether they comply with these rules. If necessary, ACM is able to take action against businesses by imposing fines or orders subject to periodic penalty payments. As ACM receives many reports about telemarketing practices involving energy contracts at the moment, ACM has now decided to issue a warning against such practices.