Electricity retailer Mercury Energy fined $279,500 after misleading customers cancelling contracts

Mercury Energy has been fined after misleading customers. Photo / Supplied

Mercury Energy, one of the country’s largest electricity retailers, has been handed a heavy fine for breaching the Fair Trading Act.

The company, of which is 51 per cent owned by the Crown, told around 2000 customers that they were liable for an early termination fee, even though the company’s terms and conditions explicitly said they weren’t.

In a reserved decision earlier this month, Auckland District Court judge Simon Lance fined Mercury $279,500 for the breach, which he labelled a material departure from the truth.

According to the Commerce Commission, which brought the prosecution against the company, changes were made to Mercury’s terms and conditions in 2016.

The change meant customers who had a fixed-term energy plan that automatically renewed would not be required to pay an early termination fee.

But between 2017 and 2020, the company continued to tell customers they were required to pay the fee upon termination of their plan. Some were told they wouldn’t have to pay the fee if they remained with the company.

Invoices were issued to around 2000 customers. The false representation was also made via email and phone on occasion.

“Not only can misrepresentations like these cause stress and harm to consumers, electricity retail is an essential service, and the ability of consumers to switch providers in line with the contracts is vital to maintain a competitive market,” the commission’s general manager of fair trading Kirsten Mannix said.

She says Mercury has since refunded almost all customers who paid the incorrect charge. Consumers who think they have been wrongly charged are encouraged to contact their provider.

In a statement, Mercury’s general manager commercial operations Craig Neustroski said the company was extremely disappointed with the breach.

“We acknowledge we got things wrong in this case – it was a genuine mistake and we have focused on making things right as quickly as possible.

“We completed remediation almost two years ago, which included apologising to impacted customers, providing refunds and a small additional payment in acknowledgment of our error.”

A small number of customers have yet to be located, so their unclaimed credit will be refunded when identified. At the same time, the equivalent of the unclaimed credit will be donated to Starship Hospital.