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Energy marketers fined over forgeries

Phony signatures were detected on 31 contracts
Companies question timing of penalties

Toronto Star - June 21, 2003
by John Spears — Business reporter

The two biggest energy marketers in Ontario have been fined a total of $232,500 after investigators discovered a string of forged signatures on energy contracts.

The Ontario Energy Board, or OEB, has fined Direct Energy $157,500 and Ontario Energy Savings Corp., or OESC, $75,000 for violating the board's code of conduct for marketers.

The energy board has notified major police forces, including all forces in Greater Toronto, of the information it has should the police want to pursue a criminal investigation.

The board decided that 21 contracts sold by Direct Energy agents were forgeries, as were 10 OESC contracts.

Paul Massara, president of Direct Energy, said in an interview that all the forgeries took place between 14 and 24 months ago, and the company has worked hard in the meantime to clean out the bad apples in its sales force.

Brennan Mulcahy, president of OESC, said the forgeries cited by the energy board on his company's agents were dated in 2001 and early 2002.

Six of the seven agents who signed the customers to the forged contracts had already been identified as problem agents and terminated by OECS prior to the energy board investigation, he said.

Massara and Mulcahy questioned why the energy board had chosen to levy the fines so long after the forgeries were committed.

The province has since passed a law requiring marketers to confirm contract signings with a follow-up call, and giving customers up to 30 days after signing to change their minds and cancel a contract.

"It's somewhat peculiar that the OEB would levy fines a year and a half later when effectively the problem was dealt with" by the new law and the efforts of the retailers, Mulcahy said.

Mark Garner, director of licensing for the board, acknowledged that the marketers have made "significant efforts," including weeding out the bad agents, cancelling the forged contracts, reimbursing customers for losses and contacting other customers signed by the dishonest agents.

Garner said the delay occurred in part because, until about 18 months ago, complaints flowed in a haphazard stream to local police forces or the energy board. Then a protocol was signed where all complaints about energy marketers were funnelled to the energy board. It took time for the board to send suspected forgeries for examination by forensic experts, then track down customers and obtain signed statements from them.

At that point, Garner said, he made a judgment call that fines were needed despite the time lapse. "We couldn't ignore it," he said.

Door-to-door energy marketers blanketed many Ontario neighbourhoods as the province prepared to open its electricity market to competition in May, 2002. The marketers prompted a wave of consumer complaints about dishonest sales tactics.

Read a 5 parts series about Direct Energy:

• Province told of Direct Energy consumer concerns in U.S., Introduction, Calgary Herald, May 16, 2004
• From Texas to Ontario, energy consumers have been stung, Part 1, Calgary Herald, May 16, 2004
• Direct Energy Part Two: "Get the hell off my porch", Part 2, Calgary Herald, May 16, 2004
• Direct Energy says it reacts to consumer complaints swiftly, Part 3, Calgary Herald, May 16, 2004
• Alberta government welcomes Direct Energy, Part 4, Calgary Herald, May 16, 2004