Dodo & CovaU Issue Refunds Over Inflated Energy Discounts
The ACCC has slammed Dodo (M2 Energy Pty Ltd) and CovaU Pty Ltd (CovaU) for false and misleading claims about its energy discounts – prompting refunds to affected customers.
The ordeal also cost Dodo and CovaU $37,800 and $12,600 in penalties respectively, after the ACCC offered infringement notices.
The consumer watchdog claims percentage discounts were misleading because discounts applied to Dodo and CovaU’s market offer rates.
The ACCC states between October 2017 to April 2019, Dodo advertised discounts on plans in VIC based on market usage and/or daily supply rates, which were around 4% higher than standing offer rates.)
Similarly, CovaU advertised electricity and gas plan discounts in VIC and NSW from January to December 2018 using market offer usage rates – around 20% higher for electricity, and up to 7% higher for gas versus standing offers.
“As a result of using higher market offer rates to calculate the percentage discount, we allege the actual savings offered to consumers were much lower than advertised,” asserts ACCC Chair, Rod Sims.
“Energy retailers are reminded that any discount must be genuine and not based on confusing and inappropriate calculations which result in inflated percentage discount claims being advertised to consumers.”
Both Dodo and CovaU have committed to refunding affecting customers, with refunds dependent on location, length of plans and how much electricity/gas used.
“Customers will be refunded an amount equal to the difference between the market rates and the equivalent standing offer rates on all bills paid during the time period in question,” claims the ACCC.
ACCC Chair, Rod Sims, asserts energy discounts must be genuine and “not based on confusing and inappropriate calculations”, resulting in “inflated percentage discount claims” advertised to consumers.
“As a result of using higher market offer rates to calculate the percentage discount, we allege the actual savings offered to consumers were much lower than advertised,” he adds.
“While the Australian Consumer Law allows us to pursue misleading claims after the fact, the Code and the new default market offer will help consumers to compare plans in a much more transparent way,” Mr Sims said.
“With the default market offer now mandated as the standard base rate, energy discount claims can now be easily understood, enabling consumers to shop around for a better deal without being potentially misled by confusing discount advertisements.”
The new Retail Electricity Code was introduced by the Australian government in response to recommendations made from the ACCC Retail Electricity Pricing inquiry report.
Further information is available on the ACCC’s website here.