Contact Energy Fined $245,000 For Misleading Fuel Discount Promotion

Energy retail company Contact Energy Limited has been fined $245,000 in the Wellington District Court for misleading customers in an advertising promotion.

Contact pleaded guilty and was convicted on seven charges under the Fair Trading Act 1986 relating to false or misleading representations made in the promotion of its Fuel Rewards Plans, which offered fuel discounts with the AA Smartfuel rewards scheme alongside electricity plans.

The promotion offered fuel discounts of 10 or 30 cents “every month” to new and existing customers who signed up or stayed on certain Contact electricity plans.

The representations were accompanied by various advertising slogans such as ‘No tricks, no waiting, no surprises’, ‘No ifs, no buts, no surprises, no rubbish, no word of a lie’ and ‘They call that a no-brainer’.

However, the advertising failed to adequately disclose key information, including that the discount could be redeemed on only one fuel fill per month and only up to a maximum of 50 litres. It was not clear that the offer did not provide a discount for every litre of fuel purchased in a month.

Promotion for the rewards scheme ran from 4 April 2017, when Contact joined the AA Smartfuel rewards scheme as a participating retailer, to 1 July 2017. The promotion covered a wide number of advertising platforms, including e-mails and letters to existing customers, as well as TV, radio, newspaper, bus advertising, digital billboards and online advertisements to the public.

Commission Chair Anna Rawlings says consumers have a right to expect businesses will be upfront and clear about their prices and discounts, so they can properly assess the benefits of signing up to an offer.

“In this case, consumers did not necessarily understand how the AA Smartfuel rewards scheme operated. Complaints to the Commission demonstrated that consumers did not all understand how the discount scheme worked and the limitations that applied to the offer. Offers to consumers need to be accurate and clear on their face, so that consumers can rely on the information they are receiving and make their decisions accordingly,” says Ms Rawlings.

“Additionally, the Commission regarded the reassuring “no tricks, no surprises” aspects of the advertisements as being likely to have reassured consumers that there was no other fine-print or information that needed to be understood before deciding whether to accept one of the offers. But in reality, the qualifications limited the benefits being offered,” says Ms Rawlings.

In sentencing Judge IG Mill said this information was important. It should have been made clear in the promotion and it was a simple matter to do so.

Background
Contact Energy Limited is one of New Zealand’s largest listed companies supplying over 550,000 customers with electricity, natural gas and LPG products.

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