Tori Mitchell thought she made the smart choice for her new Fishtown home.
When a young man knocked on her door this summer offering a better rate for her energy by simply asking to see her current PECO bill, she thought nothing of it. At the time, Mitchell and her husband were paying $130 monthly on average. If this young man in the nice polo shirt could lower that, she was all ears.
“He was super friendly at first, and was just like, ‘Hey can we see your electric bill?’” Mitchell said. “So I provided him my energy bill and he said, ‘Oh, I see you use PECO right now, but you know you can go to a competitor and lock in a lower rate each year? PECO’s rate fluctuates, but we can lock you into a lower rate for each year.”
The man, Mitchell recalled, claimed his company, Canadian-based SFE Energy, was a “parent” company of PECO. In fact, SFE is one of the more than 70 competitive generation suppliers licensed by the Pennsylvania Public Utility Commission to sell electricity. PECO, which has no corporate relationship to the companies, serves as the area’s energy provider.
“I don’t know what a low rate is or a high rate is,” Mitchell said. “He just said he would lock me into a low rate for three years, which I thought was great.”
Looking back, there were other red flags.
“He made me call his company and give them all my information,” Mitchell said of the salesperson. “He literally took my phone, dialed the number and had me talk to [a representative], claiming that this was all part of the process. I talked to someone at his company, who signed me up, then he gave me a brochure and a copy of the contract, telling me that I can cancel in 10 days. It was just weird, I would ask questions and he would just beat around the bush and not really answer them, but I guess [I’m at fault too, because] I didn’t know the right questions to ask.”
In just three days, Mitchell began to see new, questionable fees on her bill—fees she never had before joining SFE. In copies of her August bill supplied to PW, Mitchell owed $281.44, more than she claims she’d ever been charged for energy service. She also received a subsequent bill from SFE for $30.42 citing distribution, generation and transmission charges; and on three separate occasions in just one week, her bank account was tapped for payment.
“That’s when I did the research and realized that this was not legit, and that I wasn’t saving, and I canceled the contract,” Mitchell continued. “But I still used three days [of service] so I was charged for those couple of days I had them—and that’s when that second bill claiming all those generation charges showed up.”
What Mitchell and many other residents fall victim to is a practice known as “slamming,” where a fast-talking salesperson entices customers to sign potentially costly deals. While base rates are lower, other service charges add to the cost that can leave customers worse off than when they started.
Though the scam has been widely reported, thousands in the Philadelphia region fall prey to it each year. With more and more companies competing for energy dollars, teams of door-to-door salesmen are banging on the doors of innocent victims, pitching deals that may cost them hundreds or thousands of dollars.
PECO acknowledges it’s a problem, but it says its customers are partly to blame.
“I wouldn’t necessarily say that customers that have a supplier coming to their door are being scammed as much as it’s more of being duped into a situation where they’re just not educated about what they’re getting themselves into,” said PECO spokesperson Ben Armstrong. “It’s so important for every customer in our region to really understand the terms of an agreement before they sign anything. There should be no reason anyone should commit to any sort of contract in 15 minutes, unless they have all of the options in front of them and decide which one is best.”
Though not confirmed, there are also claims that the initial ask to see a potential customer’s bill is so that even if the person refuses to sign up for service, the personal information obtained gets sold to other marketing firms, ensuring another avenue for income.
However, Jeff Donnelly, director of regulatory affairs and compliance from SFE Energy told PW that third-party marketing isn’t the case with SFE. Their ask is simply to see if the customer is working with another provider.
“Typically, during our training process, we asked the sales rep to verify [via the customer’s bill] and ensure that there isn’t another retail supplier on the bill,” Donnelly said. “We don’t want the customer to sign a contract with us and incur cancellation fees with another supplier.”
Donnelly noted that SFE contracts clearly state in language required by the PUC that SFE isn’t affiliated with utility companies. He said that all sales reps must present identification which includes, clothing, badge and business cards that shows they are from SFE. Finally, he claimed that the actions of a few salesmen does not reflect SFE’s business practices or training methods, and that customers should always know that they are locking in a “fixed rate for a fixed term,” and that “savings are not guaranteed.”
“Our compliance process requires that the call to the verification center happens on the customer’s phone,” Donnelly said of SFE’s “independent third-party verification call.” “We have compliance processes in place to ensure that the call is being conducted from the customer’s phone and at the beginning of the call, the customer is asked if they wish for the [in-home] sales rep to stay or leave… We have a zero tolerance policy for representatives to misrepresent themselves as being utility or affiliated with the utility. [Our representatives] are certified and trained in accordance with the public utilities commission.”
However, while the suppliers sitting in corporate offices preach compliance from a state regulatory standpoint, it’s their commission-based foot soldiers that will say or do anything to get inside a home. There are hotlines in place to report these sales representatives within the PUC, but most energy companies like SFE don’t have their own hotline.
Joseph Fonash, a licensed Realtor with Fishtown real estate broker Keller Williams told PW that while legitimate, these types of services really don’t serve to the benefit of residential consumers. “[Actually], it’s commercial buildings that use brokers and share the savings as a fee, but it’s not much in savings for a residential home,” wrote Fonash. “The door-to-door salespeople are doing a legitimate job, but what they aren’t telling you and some themselves don’t even know is that there isn’t much to benefit from as a residential consumer.”