Need to know
- CHOICE filed its first ‘designated complaint’ to the Australian Competition and Consumer Commission in May
- We focused on the tricky pricing tactics of energy retailers and how they often result in customers paying more than they should
- The ACCC has announced that it will investigate one of the tactics we flagged, where retailers used words like 'saver' or 'savings' on plans that are far from the cheapest
When CHOICE filed its first 'designated complaint' to the Australian Competition and Consumer Commission (ACCC) in May, it was for the soundest of reasons. And we took our time in narrowing down the list of contenders.
We're one of only three organisations authorised to file such a 'super complaint', and we can only do so once a year. The ACCC is obligated to respond.
Energy retailers worked their way to the top of the list due to a long history of pricing tactics that seem designed to mislead and confuse – and to keep people on expensive plans when cheaper ones are available.
Customers already on a plan of that name can be forgiven for thinking they don't need to switch
Same name messaging is one of these tactics. Retailers roll out newer, cheaper plans that have the same name as existing plans, and announce that customers could save by switching to them. Customers already on a plan of that name can be forgiven for thinking they don't need to switch.
At a time when Australians are increasingly worried about being able to afford to keep the lights on, this has had a big financial impact. We've estimated the total cost to consumers of same name messaging at around $65 million in lost savings a year.
ACCC to investigate 'savings' promotions
Another trick is to use words like 'saver' or 'save' when marketing energy plans, suggesting that customers can save money compared to other plans. However, those other plans that don't scream 'savings' may actually be cheaper.
Confused? It's no accident that our designated complaint was entitled 'The Power of Confusion'.
The ACCC has announced that it will investigate this potentially misleading 'we suggested this plan was cheaper but it's actually not' tactic, a move that we roundly applaud.
We are concerned that consumers may be misled or deceived by plan names or descriptions of plans that offer 'savings' that are not genuine
ACCC deputy chair Catriona Lowe
"It is essential that energy retailers provide clear and accurate information about their energy plans so that consumers can make informed decisions when choosing an energy provider and plan," says ACCC deputy chair Catriona Lowe.
"Energy plans that promote 'savings' or value may entice many consumers to a particular plan and influence their decision-making. We are concerned that consumers may be misled or deceived by plan names or descriptions of plans that offer 'savings' that are not genuine, or that consumers may be discouraged from switching to cheaper plans that are available to them."
The ACCC determined that same name messaging is an issue best addressed through reforms currently under consideration by the Australian Energy Regulator and the Essential Services Commission.
CHOICE welcomes regulator intervention
Our latest national CHOICE survey data indicates that 84% of households are worried about electricity prices, the highest level of concern on record since winter 2023. Promoting plans as cheaper when they're not isn't helping.
"Our complaint highlighted a number of energy plans with names and descriptions including phrases like 'save' or 'saver' that were more expensive than other plans offered by the same retailer," says CHOICE director of campaigns and communications Rosie Thomas.
"In some instances, they were even more expensive than the retailer's standing offer. Many consumers rely on these representations as indicators of value to inform their decision-making, but we found that many of these names and descriptions may not reflect genuine value."
The ACCC says it will either take enforcement action if energy retailers are found to be misleading customers with savings messages, or it will "prepare industry guidance or contribute to policy or law reform initiatives".
CHOICE is calling on the ACCC to take strong action against the energy retailers to send a clear message that misleading consumers about savings or value is unacceptable
CHOICE director of campaigns and communications Rosie Thomas
Thomas says the time has come for energy retailers to play fair, and for the ACCC to keep the pressure on.
"Consumers are often encouraged to shop around in order to save on their energy bills, but that's impossible to do if the information they receive from retailers is inaccurate, incomplete or designed to overwhelm," she says.
"It should be easy for consumers to get a fair deal on their energy bills. CHOICE is calling on the ACCC to take strong action against the energy retailers to send a clear message that misleading consumers about savings or value is unacceptable."
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