The Commerce Commission has filed seven charges against Mercury NZ Limited (Mercury) under the Fair Trading Act for making false and/or misleading representations to some residential energy customers that they were required to pay an early termination fee when they were not.
Mercury changed its terms and conditions in 2016, such that customers on a renewed term could terminate their plan without paying an early termination fee. However, the Commission alleges that, despite this change, Mercury represented, both verbally and in writing, to some customers terminating automatically renewed fixed-term energy plans between 2017 and 2020, that it was entitled to charge a $150 termination fee.
The Commission also alleges that some customers were incorrectly told that an early termination fee would be charged if customers wanted to switch providers or that the fee would be waived if they remained a customer of Mercury.
Vanessa Horne, General Manager Fair Trading, says Mercury had an obligation to ensure that its relevant staff were fully aware of the contract terms, including changes to those terms, and that the terms were adhered to, so that customers were not misled.
“In our view, the complaint and our investigation revealed systemic problems inside Mercury that resulted in harm to customers. A number of customers were likely to have been misled and potentially out-of-pocket, because there were not robust systems in place.”
Ms Horne says almost all customers who were incorrectly charged and paid an early termination fee have been refunded by Mercury.
“However, there may well be a number of other people who have remained customers of Mercury to avoid the early termination fee – which is not fair on them or potential competitors in the retail energy market.”
Ms Horne said that this case is an important reminder of the need for businesses to ensure they have appropriate systems in place to meet their obligations under the Fair Trading Act.
“We saw this case as a critical one to take because it is about businesses needing to put the right systems in place. Things like thorough staff training and robust billing processes are imperative to assist in avoiding these situations in the future.”
The Commission cannot comment further while this case is before the Court. The first appearance is scheduled for 16 August 2022.
Background
Mercury is the third largest retail electricity provider in New Zealand. It provides electricity and gas services to around 300,000 residential customers.
