Mercury NZ has been charged for misleading customers following a complaint to the Commission Commission.
According to a recent release from the ComCom, the body has filed seven charges against Mercury NZ Limited (Mercury) under the Fair Trading Act for making false and/or misleading representations.
This comes as a result of the company telling some residential energy customers that they were required to pay an early termination fee when they were not.
Mercury is the third largest retail electricity provider in New Zealand. It provides electricity and gas services to around 300,000 residential customers.
The company changed its terms and conditions in 2016, stating that customers on a renewed term could terminate their plan without paying an early termination fee.
The Commission alleges that despite this change, Mercury represented through verbal and written channels to some customers terminating automatically renewed fixed-term energy plans between 2017 and 2020 that it was entitled to charge a $150 termination fee.
On top of this, the Commission also alleges that some customers were incorrectly told that an early termination fee would be charged if they wanted to switch providers or that the fee would be waived if they remained a customer of Mercury.
“In our view, the complaint and our investigation revealed systemic problems inside Mercury that resulted in harm to customers,” says ComCom general manager fair trading Vanessa Horne.
“A number of customers were likely to have been misled and potentially out-of-pocket, because there were not robust systems in place.
Horne also says almost all customers who were incorrectly charged and paid an early termination fee have been refunded by the company, but there may still be a number of other remaining customers of Mercury that have stayed to avoid the early termination fee, which is not fair on them or potential competitors in the retail energy market.
She says that issues like this can be prevented in the future with correct staff training and company-wide realisation of fair trading practices.
“We saw this case as a critical one to take because it is about businesses needing to put the right systems in place,” she says.
“Things like thorough staff training and robust billing processes are imperative to assist in avoiding these situations in the future.
As this case is before the Court, the Commission cannot comment further. The first appearance for the case is scheduled for 16 August 2022.
Another recent high-profile sentence for a telco under the Fair Trading Act was an NZD$2.25 million fine imposed on Vodafone NZ for misleading customers about FibreX in May 2022.