A.G. Schneiderman Distributes Nearly $2 Million In Restitution To 2,700 Columbia Utility Customers
Columbia Customers Were Falsely Promised Lower Prices; Will Now Receive Checks Averaging Over $700
Schneiderman: Deceptive Business Practices Will Not Be Tolerated
NEW YORK—Attorney General Eric Schneiderman today announced that refunds totaling almost $2 million are being mailed to 2,700 New York customers of Columbia Utilities LLC and Columbia Utilities Power LLC. The utility companies lured consumers with false promises of lower rates, and instead fleeced customers with much higher bills. The Attorney General secured the refunds for customers as part of a settlement that also imposes new restrictions on the companies’ marketing practices to prevent future frauds.
“Thousands of New Yorkers were lured by Columbia Utility’s false promises for huge savings, only to be socked with more expensive energy bills. I am very pleased to be able to return nearly $2 million to customers who were deceived by this company,” Attorney General Schneiderman said. “These are difficult economic times, and predatory companies that exploit New Yorkers looking to save their hard-earned money will be held accountable. This settlement puts energy providers on notice that these kinds of consumer frauds will not be tolerated.”
The Attorney General's investigation found that Columbia's marketers falsely promised savings of 15 percent or more on consumers' energy bills. Customers who enrolled were hit with rates that were frequently much higher than those offered by their local utilities.
The scheme succeeded in part because there is no readily available way for consumers to compare prices between their local utility and independent energy service companies (or ESCOs), like Columbia. While state-mandated tax breaks provide all ESCO customers small savings amounting to about two to three percent of their bill, Columbia's uncompetitive commodity prices more than wiped out these tiny savings.
“I urge the Public Service Commission, which regulates the utilities and ESCOs, to require real price transparency in this industry, so that consumers can benefit from competition and avoid deceptive offers,” Schneiderman said. “The absence of readily comparable price data hurts both consumers and honest energy providers who are playing by the rules.”
Columbia also falsely told consumers they could cancel their contracts if they were not satisfied. When consumers sought to cancel service, Columbia refused, locking consumers into a 12-month contract which many customers had not received.
Columbia's marketers also led consumers to believe they were affiliated with the consumer's utility company instead of an independent energy service company.
The settlement between the Attorney General’s office and the energy companies required that the companies pay restitution to consumers and established a process for consumers who were victims of Columbia's deceptive practices to file claims. The claims process, which was handled by the Better Business Bureau of Metropolitan New York, will result in payments averaging over $700 to Columbia customers who filed claims.
Columbia cooperated with the Attorney General's investigation, and before the settlement was reached it changed a number of its practices.
Following is a local breakdown of where checks were distributed statewide:
New York City - 1273
Staten Island -117
Upstate - 736
Capital Region -80
North Country -70
Central New York -343
Southern Tier -70
Long Island - Hudson Valley - 672
Long Island -135
Hudson Valley/Catskills -172
The investigation was handled by Assistant Attorney General Keith H. Gordon under the supervision of former Deputy Bureau Chief Jeffrey K. Powell, Bureau Chief Jane Azia in the Bureau of Consumer Frauds and Protection, and Executive Deputy Attorney General for Economic Justice Karla Sanchez.