Energy retailers forced to refund customers after making misleading claims

The ACCC has issued two energy retailers infringement notices for alleged misleading claims about discounts available on their energy plans.

M2 Energy Pty Ltd (Dodo) and CovaU Pty Ltd (CovaU) have paid penalties totalling $37,800 and $12,600 respectively. 

Dodo and CovaU have both committed to refund affected customers.

The ACCC considered both businesses made false and misleading claims about percentage discounts consumers would receive, because those discounts applied to Dodo and CovaU’s market offer rates which were higher than Dodo and CovaU’s standing offer rates.

ACCC Chair, Rod Sims, said, “As a result of using higher market offer rates to calculate the percentage discount, we allege the actual savings offered to consumers were much lower than advertised.

“Energy retailers are reminded that any discount must be genuine and not based on confusing and inappropriate calculations which result in inflated percentage discount claims being advertised to consumers.”

Since 1 July 2019, the Retail Electricity Code has limited the standing offer prices that are charged to consumers in New South Wales, South Australia and south-east Queensland using a cap called the Default Market Offer (DMO). The Code also requires retailers to advertise the prices of their plans by reference to the DMO. Similar obligations apply in Victoria under its ‘Victorian Default Offer’.

Mr Sims said that while the Australian Consumer Law allows the ACCC to pursue misleading claims after the fact, the Code and the new default market offer will help consumers to compare plans in a much more transparent way. 

“With the default market offer now mandated as the standard base rate, energy discount claims can now be easily understood, enabling consumers to shop around for a better deal without being potentially misled by confusing discount advertisements.”

The new Retail Electricity Code was implemented by the Australian Government in response to recommendations made in the ACCC’s Retail Electricity Pricing Inquiry report.

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