A Harrison energy broker has been accused of exploiting human decision-making frailties to gouge customers on the price of home heating oil.
Ryan Melville, of Woodstock, Connecticut, is demanding that HOP Energy pay at least $25 million to customers in the Northeast, in a class action complaint filed Dec. 6 in U.S. District Court, White Plains.
“HOP Energy’s improper conduct is designed to take advantage of consumers’ … lack of knowledge of the heating oil market,” the complaint states, enabling the company to deploy “underhanded tactics to maximize its own profits at unsuspecting consumers’ expense.”
HOP did not respond to an email asking for its side of the story.
The company, founded in 2006 by Michael Anton, sells heating oil to about 100,000 consumers in eight states in the Northeast. In 2018, Melville signed a heating oil contract with DDLC Energy, a HOP subsidiary in New London, Connecticut.
The price was capped for the first year or first 1,000 gallons of fuel, according to the complaint. Then he would be charged the promotional prevailing retail price.
But after a year he was allegedly notified that his account would automatically default to a variable price plan.
For 18 months, until he canceled the service, the price of his oil was always higher than the prevailing rates, Melville alleges, as compared to state and federal benchmarks.
He paid 42% to 46% more than the benchmarks, the complaint states, and during the winter season up to 60% more.
This past March, for instance, he was charged $4.30 per gallon when the state and federal benchmarks were at $2.80 to $2.90.
“No reasonable customer would interpret ‘promotional prevailing retail price,'” the complaint states, “to mean that HOP Energy is contractually permitted to charge 60% or more above the prevailing retail price.”
There is no difference in heating oils, according to the complaint, so price is the most important factor in selecting a provider.
But a company can exploit “information asymmetry” ”” a customer’s ignorance about energy markets ”” as well as the human tendency for inertia or favoring the status quo.
“Most consumers would not know they were being overcharged and would simply pay the exorbitant charges month after month after month,” the complaint states. “As a result, HOP Energy is fleecing tens of thousands of unsuspecting consumers out of millions of dollars in exorbitant home heating oil costs.”
The lawsuit was filed as a class action on behalf of HOP customers in Connecticut, Delaware, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.
HOP was accused of breaches of contract and the implied covenant of good faith and fair dealing. The court is being asked to stop it from engaging in alleged improper conduct and to award at least $25 million in damages, “to level the playing field and ensure that companies like HOP Energy engage in fair and upright business practices.”
The action was brought by Armonk attorney J. Burkett McInturff and Haddonfield, New Jersey attorneys Jonathan Shub and Kevin Laukaitis.
