In victory for consumers, Maryland Supreme Court concludes telephone sales law applies to retail supplier’s marketing scheme
BALTIMORE – Utility customers victimized by false and misleading marketing of retail energy supply services may get long-awaited relief following a Supreme Court of Maryland decision this week that upheld the Public Service Commission’s findings and sanctions from 2021.
The case arose out of the marketing campaign by SmartEnergy Holdings, LLC, involving the mailing of six million postcards sent to Marylanders to persuade them to call and sign up for supply services. Before the Commission, OPC put on evidence about how SmartEnergy’s business practices were misleading, deceptive, and resulted in customers paying exorbitant rates.
“We are pleased that customers may finally get refunds of the exorbitant amounts SmartEnergy billed for years,” said People’s Counsel David Lapp. “After lengthy appeals, we look forward to implementing the Commission’s decision and getting customers the relief they deserve.”
One of the key arguments on appeal was whether the Maryland Telephone Solicitations Act applied to “in-bound” calls from customers that were prompted by the supplier’s postcards. SmartEnergy argued the law did not apply. The court rejected the arguments SmartEnergy made in support of that position, calling them “illogical and untenable.” The court also upheld the Commission’s findings of deceptive marketing practices based on evidence OPC and Commission Staff presented.
The Commission’s 2021 order required all customers SmartEnergy enrolled over the telephone to be returned to their utility’s standard offer service, with affected customers getting refunds for the difference between SmartEnergy’s rate and the customers’ utilities’ lower standard offer service rate. The Commission, however, put the refunds on hold pending the outcome of SmartEnergy’s now exhausted appeals; it will decide on penalties and license revocation in a subsequent proceeding.
OPC attempted, while appeals were pending, to strengthen bond requirements designed to ensure SmartEnergy customers receive the refunds courts have now confirmed they deserve. OPC argued in 2021—and again in 2023 and last week—that SmartEnergy’s $2.5 million bond was inadequate, given that the company disclosed in April 2021 that the refunds it then owed totaled about $6 million. That amount can only have grown as SmartEnergy continued to serve existing Maryland customers (though it was barred from adding new ones). The bond remains unchanged.
“The court’s decision should put retail suppliers on notice that there are consequences to deceiving customers,” Lapp said. “We will continue to pursue complaints against suppliers that deceive customers by phone or through other methods.”
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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