Energy scammers are active again, warns ERO board member Zemanová

With the end of the energy crisis, unfair practices by energy scammers are reappearing. This contrasts with energy suppliers, as ERO board member Zemanová described in the first part of the interview. Their activity is being fuelled by the market recovery and the general decline in gas prices and electricity prices, which motivates consumers to change their contracts.

A frequent problem encountered by the ERO is penalties for withdrawing from a contract. Consumers often switch suppliers and subsequently complain to the ERO about a penalty imposed on them. “Sometimes customers are to blame because they forget about their valid commitment, but in most cases it is suppliers or intermediaries,” says ERO board member Markéta Zemanová.

In the second part of the interview, Markéta Zemanová also highlighted how they resolved a case in consumers’ favour in which a supplier, through “stacking penalties”, demanded payments amounting to tens of thousands: “Our legal interpretation is different; we are convinced that such ‘stacking of penalties’ is not possible,” the ERO board member said.

In the interview, she also points out that cases of doorstep selling are reappearing and explains how the ERO tackles them.

Dishonest intermediaries, known as energy scammers, were particularly active before the crisis. What is the situation now?

Unfortunately, their activity is also increasing with the market recovery, although compared with the pre-crisis period we are still talking about an order of magnitude fewer complaints. They are again violating the ban on doorstep selling and trying to literally force new energy supply contracts on people. Since the beginning of the year, we have received just under 500 complaints about them. That may seem relatively low considering that we currently receive around a thousand consumer submissions each month. However, we expect the problem to grow, which is why we are already drawing systematic attention to it. This brings me to the fact that the energy crisis did, after all, change something in our consumer protection practice.

What was that?

We began placing even greater emphasis on prevention and are seeking to systematically educate consumers. Whether through the media, our website or social media. We have created a range of information materials, guides and sets of ten rules for model situations. We always and everywhere emphasise that the key is to prevent potential problems and thus avoid them altogether. Read all documents carefully before signing, ask about anything unclear and do not believe unrealistic promises. And if any problem does arise, be proactive and address it immediately. Of course, not everyone will do this, but awareness is generally increasing, and I dare say that we have contributed to that.

Are you already seeing a positive trend in consumers’ behaviour and their awareness of energy issues? After all, if there is anything positive to be found in the energy crisis, it is that people have started taking an interest in energy.

You are right, that is the case. We can see it in the fact that consumers used to approach us with very similar questions and complaints, whereas now they are much more individual and sophisticated. They are also much more often resolving their problems through official channels, meaning by initiating a consumer dispute. They certainly have greater awareness of their rights and obligations, as well as of our role as regulator. Unfortunately, however, we still encounter the fact that many people confuse suppliers with distributors and do not distinguish between unregulated and regulated energy prices.

What do consumers most often approach you about at present, and in what numbers?

In terms of numbers, since 2021 we have gradually broken “records” across all consumer-related areas. We received more than 22,000 informal submissions, meaning any questions or complaints, annually in both 2021 and 2022, which was nearly double the previous level. Last year, we received 628 applications for consumer disputes, compared with 138 in 2021. And in the first quarter of this year alone, we already have 185. There were 2,112 reports prompting inspections of suppliers’ conduct towards customers in the past two years, while we had only 387 in 2020 and 2021. Two years ago, we also took on extensive new responsibilities, specifically levies on excess revenues of generators and compensation to traders for having to cap prices. However, we did not receive any additional staff, so we had to make organisational changes to ensure these new agendas were covered. As a result, despite all these statistics, some consumer-related areas are handled by fewer people than in the past…

And what about the issues themselves?

We most often deal with billing and payment terms, which account for nearly half of submissions. This includes problems with the amount of advance payments and matters related to billing statements, such as their late delivery, failure to honour the contracted electricity price or gas price, and failure to meet the deadline for a subsequent complaint. Last year, this was joined by some suppliers failing to refund overpayments. This concerns only a handful of smaller suppliers, but judging by the number of complaints, unfortunately affects the overwhelming majority of their customers.

What do you advise them to do?

First, they should always request payment of the overpayment from the supplier in writing—and I emphasise, in writing. They can then send a pre-litigation demand letter. If the trader does not respond, the consumer has two options. A useful tool is the so-called set-off declaration. This means informing the supplier, simply put: I am setting off the claim represented by the overpayment of such-and-such an amount against advance payments. Therefore, I will not pay advance payments in such-and-such months. Naturally, everything must be specified and the formal requirements for set-off must be met. At the same time, however, we always add that simply stopping advance payments without such notification is definitely not an option! The obligation remains even if the supplier owes us money, and we would risk having the supply point disconnected. Through set-off, however, we fulfil our obligation as customers.

What is the second option?

To pursue enforcement proceedings, for which an enforceable title is needed. Anyone can obtain one through a claim before a civil court, and consumers can also obtain one from us through out-of-court dispute resolution. Incidentally, that is also why the number of dispute applications submitted to us is rising. But as you can see, recovering a withheld overpayment is quite complicated. This is why prevention is also best in this case—setting advance payments at a level corresponding to actual consumption. This is, after all, also the approach taken by the Energy Act, which prohibits suppliers from setting excessively high advance payments.

What else do people approach you about?

Another group of complaints and questions, roughly a quarter, concerns changing suppliers, something an increasing number of consumers are doing. More specifically, it concerns incorrectly terminating an existing contract. Sometimes customers are to blame because they forget about their valid commitment, but in most cases it is suppliers or intermediaries. They have customers sign a power of attorney and promise to handle everything for them, assuring them that even if they terminate a fixed-term contract early, they definitely will not have to pay any penalty. Well, then they fail to deliver—simply because they promise something that cannot be fulfilled. Moreover, when we look at the contract with the intermediary or new supplier, it naturally contains no such commitment that the client will not pay a penalty when changing supplier. So the old saying applies: “What is written is binding.” We should not believe what is not written down; there is simply no way to enforce oral promises made somewhere in a doorway or at a counter.

And then people pay high penalties?

Yes, exactly. We have also encountered cases where a supplier charged not only contractually stipulated penalties, but additionally damages—not on the basis of the contract, but under the Civil Code. This resulted in payments amounting to tens of thousands. Our legal interpretation is different, however; we are convinced that such “stacking of penalties” is not possible. We drew attention to these cases and met personally with one of the suppliers concerned. It appears that the situation has begun to improve. Such successes, where we negotiate something for consumers without having to launch official proceedings or directly amend the law, naturally make me happy. Not least because help comes immediately.

In many other matters, however, our hands are tied and we cannot help as we would like. Consumer protection in the energy sector, and the broader improvement of the energy market, is simply a long-term undertaking—a real marathon. It was only the crisis that revealed many shortcomings and the nature of certain traders. When they were proverbially in trouble, they showed their true colours, for better and for worse.