Customer accuses Direct Energy of misleading sales tactics

A woman in Grande Prairie, Alta., is accusing Direct Energy of using misleading sales tactics to trick her into a utility contract.

The company calls its interactions with Angela Blundell a misunderstanding, and has since cancelled the disputed contract.

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Six years years ago,Direct Energy made a legal commitment to the Alberta governmentto end potentially illegal sales tactics used to entice customers of Direct Energy's government-regulated division into unregulated gas and electricity contracts.

In 2009, the Director of the Fair Trading Act said there was reason to believe sales agents' presentations may have broken the law by failing to explain the difference between Direct Energy's regulated and contract divisions.

The sales pitch coincided with a doubling of the number of complaints to the government about Direct Energy in 2008-2009.

Angela Blundell told Go Public that a Direct Energy salesman used the same sales pitch on her this spring.

The seller presented Direct Energy credentials, and Blundell said he told her the company was offering its existing customers simplified billing and better rates.

"He said, 'We're all the same company and I'm just here to give you a better rate,'" Blundell said.

In fact, he was selling fixed-rate gas and electricity contracts for an unregulated Direct Energy subsidiary.

Direct Energy is a separate corporate entity, and its electricity rates are not regulated by the Alberta government, unlike those of Direct Energy Regulated Services.

No guarantee contract rates will be lower

There is no guarantee its contract rates will be lower than the regulated rates.

Both companies are owned by Direct Energy of Houston, Texas.

I was very angry. I did not authorize this.- Angela Blundell, Grande Prairie, Alta., resident

Blundell said she specifically asked the salesman the name of his employer.

"He said, 'We're the same company,'" Blundell said.

The salesman didn't ask her for any further accountinformation, she said.

Blundell wanted to make sure there would be no fee for what he was proposing and that her existing monthly budget payment plan would remain the same, she said.

"He said flat out, 'No. Nothing will change. All that will change is your rate,'" she said.

"So I thought, 'If I can get a cheaper energy bill, [that would be] awesome.' I thought, 'Hey this looks legit,' so I signed it."

No intention of switching companies

Three weeks later, Blundell discovered she had agreed to a long-term fixed-rate gas and electricity contract.

Direct Energy had closed her account with Direct Energy Regulated Services on her behalf, something she says she never intended.

"I was very angry. I did not authorize this," Blundell said.

"I asked for my account to be restored and she said, 'No way.'"

Blundell said she was told she had chosen a service with a different company and her account was closed.

"It's so deceiving," she said. "It was all the same letterhead. It was Direct Energy with the little box. And [the salesman's] verbal assurance that they were same company."

He was, in my mind, out for a paycheque ... and tricked us into thinking they were the same company."

Blundell said she was disappointed to hear about Direct Energy's 2009 legal undertaking to end potentially unfair sales practices.

"I would say nothing's changed. I would say that's exactly what they're doing," she said.

Government could investigate, levy penalty

Service Alberta says Direct Energy must make it clear to consumers the company has different divisions one with rates that are government regulated and others with products that are not and must not confuse the two.

"If that's happening, we need to know about it," said Cheryl Tkalcic, Service Alberta spokeswoman.

Tkalcic said if Direct Energy were found to be using unfair sales tactics, it could be prosecuted.

She said it would also be a concern if the Direct Energy salesperson already knew Blundell's account information as Blundell believes.

"It's something we need to investigate," she said.

Blundell complained to Alberta's Utilities Consumer Advocate. After that, Direct Energy agreed to cancel her long-term contract and reopen her account at Direct Energy Regulated Services.

In response to questions from CBC's Go Public, Direct Energy's external relations manager in Houston, JessicaMichan, issued a brief statement.

An internal investigation was conducted and Ms.Blundell'saccount has been reverted to its original status ...- JessicaMichan, Direct Energy, Houston

"An internal investigation was conducted and Ms. Blundell's account has been reverted to its original status with the regulated provider, Direct Energy Regulated Services. We sincerely apologize for the misunderstanding."

Now Blundell wants to know why her regulated bill remains so high.

When Direct Energy Regulated Services closed her account, the company sent her a final bill for over $1,500.

The company's budget payment plan with Blundell was $147 a month, which apparently came nowhere near her actual consumption.

Blundell is now questioning how her family's electricity consumption could be between 50 and 100 per cent higher than the average Alberta household, especially when her heat and hot water are powered by natural gas.

"We don't have a hot tub. We don't have a jetted tub. We definitely don't have a grow-op. We have four young children, " she said. "That's why I'm so baffled."

In 2009 the Alberta government found Direct Energy sellers may have misled people into signing un-regulated energy contracts.The company promised to make sure its staff knew and complied with the law in future.