Luring customers in with low rates, only to raise those rates once the customer has been acquired, is a common tactic known as bait-and-switch. It is particularly effective in hooking low-income and elderly customers who have a fixed budget because they are most often the people who are on the lookout for the best deal. Unfortunately, when a deal seems like it might be too good to be true, the sad fact is that it usually is.
When ComEd announced earlier this year that it would be raising its rates by 21 percent, the number of people looking for a deal jumped dramatically. Unfortunately, many companies took advantage of this jump by promising low rates. However, because many of these companies are unregulated, they can raise their rates later by as much as they want, when they want. They don't even have to provide their customers with an explanation for the raise in rates.
ComEd's rates recently went up from 5.5 cents per kilowatt-hour to 7.6 cents per kilowatt-hour. A kilowatt-hour is the amount of energy required to power a medium-sized window AC unit for one hour. The average ComEd customer uses 655 kilowatt-hours per month. Despite Starion's claims that customers can save money by switching to Starion Energy, Starion's average rate is allegedly 13 cents per kilowatt-hour, almost double ComEd's price.
According to a recent class action lawsuit against Starion Energey, the energy company, based in Middlebury Connecticut, allegedly used bait-and-switch tactics to gain customers. Once the customers had been acquired, Starion allegedly raised rates to levels that were even higher than those of its competitors. The lawsuit alleges that, when compared to the energy, market, Starion's rates were exorbitant.
The lawsuit was filed in the Southern District of New York by Sanford Heisler, a public interest law firm that has offices in New York, Washington D.C., and San Francisco. Diana Windley is the lead plaintiff in the case, but the lawsuit is seeking to represent thousands of customers all over the country.
The class action lawsuit is seeking a jury trial, compensatory damages, triple damages, interest, and an injunction against Starion continuing to use "deceptive, illegal, and unlawful trade practices and schemes." Because of the high number of customers Starion allegedly defrauded, the lawsuit has been filed for $50 million.
This is not the first time Starion has been accused of allegedly violating the law. In July, Starion, Connecticut Gas & Electricity Co. and Direct Energy LLC were the subject of an investigation conducted by the Public Utilities Regulatory Commission (PURA). The companies were being investigated for allegedly illegally switching the energy providers of its customers without their knowledge.
Just a few months before that, Maryland ordered Starion to pay $350,000 in fines for multiple alleged violations of state law. These alleged violations included allegedly: (a) enrolling and re-enrolling customers without their consent; (b) misrepresenting policies; (c) misleading customers into believing their salesmen worked for a different company; and (d) failing to adhere to state law concerning door-to-door sales, including notifying customers of their right to cancel within three days. Starion denied all these claims and denies the claims in the recent class action lawsuit brought against it.
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