Contact Energy charged over misleading promotion

The case will be heard in the Wellington District Court on 29 April. Photo/File.

Electricity company Contact Energy faces seven charges under the Fair Trading Act for allegedly misleading customers in advertising.

The Commerce Commission alleges Contact Energy made false or misleading representations in adverts that offered fuel discounts with AA Smartfuel alongside electricity plans.

The campaign offered fuel discounts "every month" to new and existing customers who signed up or stayed on certain Contact electricity plans.

The campaign ran from 4 April 2017 when Contact joined the AA Smartfuel rewards scheme to 1 July 2017, featuring across e-mails, TV, radio, newspaper, bus, digital billboard and online ads.

The Commission alleges Contact Energy made false or misleading representations about the offers, by failing to adequately disclose key information in the advertising, including that the discount was only accessible once per month, and rewards could only be redeemed on one fill, and up to a maximum of 50 litres of fuel.

A spokesman from Contact Energy said the company was working with the Commerce Commission to ensure the matter is resolved as quickly as possible.

The case will be called in the Wellington District Court on Monday 29 April.

Contact is the country's second-largest power retailer and has lost almost 39,000 customers in the past five years. Like most of the major firms, it has had to work harder in recent years to offer greater value to consumers – through better rewards and new services like broadband – rather than competing on price alone against lower-cost, new-entrant players.

In the three months following the Smartfuel launch in 2017, it added about 1,400 customers. That was about 25 percent less than in the same period a year earlier, according to Electricity Authority data.

In the past year, the Commerce Commission has closed about 30 investigations under the Fair Trading Act, resulting in the issuing of 10 warning letters and 13 court prosecutions.