Liberty Power Holdings, an energy service company that persuades people to switch services from their local utility companies, has agreed to compensate customers who were deceived by unscrupulous telemarketing and door-to-door sales tactics.
Liberty promised to pay $550,000 in refunds, and agreed to implement tougher training, as well as more stringent sales procedures to prevent future frauds. The agreement was signed yesterday by Liberty CEO David Hernandez and by representatives of state Attorney General Eric T. Schneiderman.
The settlement covers sales throughout New York since 2012, including the territories of Con Edison in Westchester and of Orange & Rockland Utilities. New York allows businesses and residents to buy electricity from companies such as Liberty, instead of from their local utilities, under the rationale that competition tends to lower prices.
Liberty, a subsidiary of Liberty Power Corp. in Fort Lauderdale, Florida, touts its “service with a personal touch” on its website and declares that it believes in “doing business by doing the right things.”
Initially, it focused on small and medium-sized businesses, but in 2012 it began soliciting residential customers. Complaints to the Public Service Commission and state attorney general soared.
Sales representatives impersonated local utility reps by displaying false identifications and wearing clothing similar to the local utility’s uniform. Some reps gained entry to apartment buildings by pretending to work for a government agency.
They said they were trying to confirm that customers were not being overcharged by their utility providers. Liberty’s rates were lower, buyers were assured, but in many instances customers ended up with higher bills.
People were tricked into signing up for Liberty’s services: they were presented with forms that were described as a billing correction or a discount that were actually enrollment contracts.
Sales reps got children and occupants of homes who were not the customers of record to consent to enrollment. When customers learned of the new service and cancelled, they were charged a $200 early termination fee.
People were not given copies of documents they signed. Those who tried to cancel service were often unable to reach a live person on Liberty’s customer service line, were put on hold for unreasonably long periods or promised return calls that never came.
Telemarketers repeatedly made calls to phone numbers listed on the federal Do Not Call Registry. The Public Service Commission alerted Liberty to improper sales tactics in 2012 but the company was unable to curb the complaints.
Liberty had hired a marketing contactor to solicit residential customers. That firm hired a subcontractor who in turn hired numerous small-scale subcontractors. But Liberty failed to promptly recognize the red flags or rein in the contractors.
In 2013, the PSC suspended Liberty’s authority to conduct door-to-door sales. After the company fired the marketing firm and revised its program, it was allowed to resume sales under a two-year probation period.
But since 2015, the settlement says, more than 100 complaints have been lodged against Liberty for the same kinds of deceptive practices. The settlement requires Liberty to correct those practices, train its sales reps, monitor performance and establish a $550,000 fund.
New Yorkers who bought electricity from Liberty can apply for a refund online at https://forms.ag.ny.gov/CIS/consumer-complaints.jsp or by calling 800-771-7755.
Liberty neither admitted nor denied the attorney general’s findings, in the standard language of such settlements, and conversely agreed not to express any views that the settlement is without factual or legal basis.