Attorney General James Secures Over $2 Million For Consumers Deceived By Energy Service Company

March 14, 2022

New York Attorney General Letitia James secured $2.15 million in restitution from an energy services company, Family Energy, for deceiving and misleading thousands of New Yorkers across the state.

 An investigation by the Office of the Attorney General (OAG) found that Family Energy’s dishonest business practices resulted in New York consumers paying more for their gas and electric services — sometimes hundreds of dollars more per year — than they would have paid to their utilities.

As a result of Attorney General James’ agreement, Family Energy is required to stop its deceptive practices.

“Family Energy used deception to fool countless New Yorkers,” said Attorney General James. “My office has zero tolerance for deceptive and unlawful practices by energy service companies that hurt New Yorkers. Utility companies have a duty to be honest and accurate and we are committed to holding them to that standard. Today’s actions should send a clear message to all energy service companies: if you don’t follow the law, expect to hear from my office.”

Family Energy is an energy services company that offers electric and gas products throughout the state. An OAG investigation found that it lured consumers with false promises of savings, and then charged them significant early termination fees when they tried to get out of their contracts.

Many consumers did not even realize they had been enrolled with Family Energy, since sales representatives falsely claimed to represent the consumers’ utility and even enrolled consumers without their consent.

Hundreds of consumers complained about Family Energy’s practices to the New York Public Service Commission (PSC). In fact, Family Energy had the highest volume of PSC complaints in both 2020 and 2021.

As a result of OAG’s agreement with Family Energy, the company is required to pay $2,150,000 in restitution to impacted consumers.

In addition, Family Energy is required to take measures to prevent deceptive practices in the future, including adequate training of customer service representatives, recording telephone communications between customers and sales representatives that result in a sale, refraining from misleading marketing and advertising that implies savings, regularly monitoring sales calls, and implementing appropriate disciplinary procedures for violations of the law.

New Yorkers who bought electricity from Family Energy may be eligible for a refund if they were subject to certain deceptive practices.

New Yorkers can submit a complaint online or call (800) 771-7755 to receive a complaint form by mail and return it to the Consumer Frauds and Protection Bureau at 28 Liberty Street, New York, NY 10005.

When purchasing gas and electricity, consumers have two choices:

  1. buy directly from a utility company or
  2. contract the purchase through an energy services company (ESCO) that purchases energy on the open market and then sells that energy to consumers.

Because ESCOs buy the electricity and gas they supply to their customers from the same sources as the utility companies, there is no qualitative difference between the electricity and gas supplied by ESCOs and utilities.

The PSC has recognized problems with the ESCO industry and has adopted regulations that restrict the kinds of plans ESCOs can offer to residential and small business consumers. 

In addition to guaranteed savings products, ESCOs can offer green products or fixed rate products that do not provide savings over utility rates.

The agreement with Family Energy is part of OAG’s long-standing, ongoing investigation of ESCOs. Investigations into this industry have resulted in ESCOs paying millions of dollars in restitution and penalties.

Over the last five years, OAG has recovered nearly $7 million in settlements from five ESCOs.

Consumers can protect themselves from unscrupulous ESCOs by remembering the following tips:

  • If you receive an offer for energy services, make sure you understand whether the offer is from your utility or an ESCO.
  • You do not have to choose an ESCO to supply your gas or electricity. You may choose to use your utility as your direct supplier.
  • Make sure you understand whether an ESCO contract involves an early termination fee and, if so, the fee amount and the length of your contract commitment.
  • Before accepting any offer, ask the ESCO to show you how its rates have compared with your utility’s rates during each month in the past year. This can help you judge how competitive the ESCO’s rates may be in the future.
  • Remember that you have the right to cancel an ESCO contract with no obligation within three days if you change your mind.
  • If you are uncomfortable with how a marketer behaves, end the conversation with a request to look over their offer in writing so you can get back to them when you have made a decision free of any pressure.
  • If you receive a notice that your service is being switched to an ESCO and you did not authorize the switch, contact the utility and the ESCO immediately to tell them to halt the switch. If you are unable to get an ESCO switch cancelled, contact PSC at 1-888-697-7728.

The Family Energy investigation was handled by Assistant Attorneys General Kate Matuschak and Stewart Dearing of the Bureau of Consumer Frauds and Protection, all under the supervision of Deputy Bureau Chief Laura J. Levine and Bureau Chief Jane M. Azia, with assistance from Data Analyst Anushua Choudhury in the Research and Analytics Department.

The Research and Analytics Department is led by Deputy Director Megan Thorsfeldt and Director Jonathan Werberg.

The Consumer Frauds and Protection Bureau is part of the Division of Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Jennifer Levy.

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