NEWARK – HIKO Energy, LLC (“HIKO”) has agreed to pay $2.1 million, including $1.85 million in restitution to consumers, and to significantly revise its business practices, in order to resolve the Complaint filed by the Acting Attorney General, New Jersey Board of Public Utilities (BPU), and New Jersey Division of Consumer Affairs.
“HIKO aggressively solicited consumers with written guarantees and verbal representations about its monthly prices for electric and/or natural gas service – promises the company failed to fulfill, resulting in significant financial losses for New Jersey consumers,” Acting Attorney General John J. Hoffman said. “We have insisted that HIKO make this right, both retrospectively and prospectively, and we continue to pursue action against other third-party energy suppliers accused of misleading consumers.”
The State’s Complaint alleged that HIKO, a third-party energy supplier based in Monsey, New York, misled New Jersey consumers with written guarantees that, if they switched from their utility companies, they would see monthly savings of as much as 10 percent in their electric and/or natural gas bills during the first six months. HIKO sales representatives also allegedly represented to consumers that, after the first six months, their monthly bills would never exceed those of the utility companies.
However, HIKO did not deliver the promised savings. As energy prices spiked in early 2014, HIKO’s rates far exceeded those its customers would have paid, had they stayed with their previous electric and/or natural gas utilities.
The State also alleged that HIKO switched some consumers’ electric and/or natural gas accounts without the consumers’ knowledge or consent, an illegal practice known as “slamming.”
“The State’s actions to protect consumers against allegations of misleading business practices and to procure restitution for customers of HIKO should serve to reassure New Jersey ratepayers that their interests are being protected when they shop for a third-party to supply their electric or natural gas service,” said Richard S. Mroz, President, New Jersey Board of Public Utilities. “To ensure that consumers receive clear and accurate information about the terms of energy supply contracts, the Board recently ordered all third party suppliers to provide a standard one-page summary of the key terms of the agreement, including price, length of contract and whether the rate is fixed or variable.”
HIKO has made the first of three settlement payments and must provide the entire $2.1 million by June 1, 2015. The State will distribute the $1.85 million designated for consumer restitution in late summer, with the help of a Settlement Administrator designated under the terms of the settlement. The settlement amount also includes $150,000 to reimburse the State’s investigative costs and fees, including the cost of distributing settlement funds, and $100,000 in civil penalties.
“The Division of Consumer Affairs, in cooperation with BPU, took decisive action in response to consumer complaints about alleged misrepresentations by HIKO and other third-party energy suppliers,” Division of Consumer Affairs Acting Director Steve Lee said. “Consumers switched energy suppliers due to the promise of reduced monthly bills – but instead found their bills spiraling out of control last winter. We will continue to monitor the third-party energy supplier marketplace for the protection of consumers.”
Additionally, under the settlement, HIKO agreed to make significant revisions to its business practices. These include revising the company’s website, contracts and related documents to provide, among other things, clear information about the company’s pricing and billing practices, including the precise formula by which monthly gas and electric prices will be determined. The website will include a clear and conspicuous chart of the final unit prices that HIKO charged to consumers during the previous six months, as well as comparison rates charged by the utility companies.
HIKO also will ensure that its consumers are provided with all of the material terms and conditions in a single, clearly legible document. HIKO will further ensure that the HIKO website and contracts will not include contradictory or inconsistent information. The State’s Complaint alleged that consumers were at times presented with various documents that contained contradictory information about HIKO’s terms and conditions.
The company will revise its sales practices by re-training its sales representatives, whether company employees or third-party vendors, maintaining recordings of sales calls for three years, and taking disciplinary action against any sales representatives who subject consumers to deceptive or misleading sales practices. The company also will either stop offering guarantees and/or making representations of price savings, or will ensure that it actually provides the savings guaranteed and/or represented to consumers.
Moreover, among other terms of the settlement, HIKO will revise its customer service practices by establishing an office in New Jersey at which consumers can speak with customer service representatives and access their consumer records. The company also will ensure its customer service staffing is adequate to let consumers immediately contact a live person during normal business hours by phone, email, or office visit. The company shall undertake to respond to consumers’ voicemails and letters within 24 hours.
HIKO is one of three third-party energy suppliers sued by the State this past spring, due to alleged violations of the Electric Discount and Energy Competition Act, the Consumer Fraud Act, multiple regulations concerning energy licensing and registration, retail choice consumer protection, anti-slamming requirements, and advertising by energy suppliers, and/or the Plain Language Act. The Complaints against defendants Palmco Power NJ, LLC and Palmco Energy NJ, LLC (collectively, “Palmco”), and Keil & Sons, Inc., d/b/a Systrum Energy (“Systrum”) are pending.
Division of Consumer Affairs Investigator Jeffrey Watkins and Investigator/Team Leader Aziza Salikhov conducted this investigation.
Deputy Attorney General Cathleen O’Donnell, of the Consumer Fraud Prosecution Section within the Division of Law, and Caroline Vachier, Section Chief of the Public Utilities Section of the Division of Law, represented the State in this action.
Consumers who believe they have been affected by unconscionable commercial practices of a third-party energy supplier are urged to contact the Division of Consumer Affairs at 800-242-5846 (toll-free within New Jersey) or 973-504-6200. Consumers who wish to file a complaint are reminded to provide all relevant documentation they may have, such as contracts, bills, and marketing or advertising materials, along with their complaint.