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Unfair and Deceptive Acts and Practices: 8.5.1.5 Price Gouging

The Connecticut, Massachusetts, and Iowa Attorneys General have adopted UDAP regulations432 that prohibit “unconscionably excessive” prices for petroleum products (including home heating oil and propane) or utilities during market disruptions or disasters. “Unconscionably excessive” is defined as prices substantially higher than petroleum prices immediately prior to the onset of the market disruption, unless the increase is justified by higher costs.

Unfair and Deceptive Acts and Practices: 8.5.2.2.1 Introduction

About one-third of U.S. states454 have laws that deregulate parts of the state’s utility market. About sixteen states have deregulated electricity markets, and several more have deregulated sales of natural gas. States with deregulated electricity or natural gas markets allow companies furnishing gas or electricity to market their services to consumers as an alternative to their incumbent provider.

Unfair and Deceptive Acts and Practices: 8.5.2.2.2 Deceptive marketing practices

Across the country, consumers in deregulated states file thousands of complaints each year against alternative supply companies.456 Many complaints demonstrate a similar pattern—a salesperson may tell the consumer that they could be eligible for a lower rate or discount on the utility bill, asks to see the customer’s utility bill, and then either uses that information to sign up the consumer involuntarily (an unlawful practice sometimes referred to as “slamming” as described in

Unfair and Deceptive Acts and Practices: 8.5.2.2.3 Unauthorized switching or slamming

Consumers frequently report that they have been involuntarily switched from utility service to alternative supply.458 This unlawful practice is sometimes referred to as “slamming” and was previously common among long-distance telephone service providers. Although state laws prohibit slamming, consumers continue to report incidents of unlawful switching.

Unfair and Deceptive Acts and Practices: 8.5.2.2.4 High prices

Alternative energy suppliers usually claim that switching to their services will result in huge savings for the customer (although there are exceptions, as a small number of companies offer services that tout a higher mix of renewable energy rather than cost savings).

Unfair and Deceptive Acts and Practices: 8.5.2.3 Illegal Shut-Offs and Interrupted Service

Re-connecting utility service does not fully remedy an illegal shutoff or prolonged interruption of service. While the service is shut off, the consumer invariably suffers various injuries—food spoilage, frozen pipes, lost use of the housing unit, the cost of alternative housing, and pain and suffering. Since state utility commissions usually do not redress these injuries, UDAP claims and private tort actions may be the best approach.487

Unfair and Deceptive Acts and Practices: 8.5.3.1 UDAP Applicability

One of the fastest changing sectors of the consumer marketplace involves telecommunications. New products and services typically are associated with new unfair and deceptive practices and this area has seen much litigation. But there are also a number of impediments to applying UDAP statutes to these practices.

Unfair and Deceptive Acts and Practices: 8.5.3.2 Slamming (Changing Service Providers Without the Consumer’s Authorization)

“Slamming” is the practice of changing a customer’s service provider without the customer’s consent. In the past this abuse was commonly seen in the provision of long-distance service, but it can occur with the provision of any competitive utility service, including electricity and natural gas in some states. The federal and state laws that address slamming are discussed in detail in NCLC’s Access to Utility Service.499

Unfair and Deceptive Acts and Practices: 8.5.3.3 Prepaid Phone Cards

Prepaid calling cards can be used to add minutes or data to prepaid wireless service plans and can also provide minutes for international calling. Some are offered by telecommunications providers, but most are offered by other companies that buy minutes from telecommunications providers in bulk and then resell them.

Unfair and Deceptive Acts and Practices: 8.5.3.5.1 Arbitration and preemption issues

A consumer wishing to bring a UDAP claim concerning wireless or cell phone charges, early termination penalties, or other practices faces a number of obstacles. The first is that virtually all wireless service contracts require arbitration of disputes and ban the consumer from proceeding in arbitration on a class-wide basis.524 Whether the arbitration requirement and the class arbitration ban are enforceable are discussed in another NCLC treatise.525

Unfair and Deceptive Acts and Practices: 8.5.3.7 Internet Service Providers

The question of federal regulation of internet access has been highly controversial. In 2018 the FCC issued a declaratory ruling reclassifying broadband internet access service as an information service under title I of the Telecommunications Act of 1934 557 rather than under title II.558 The result is to drastically reduce federal oversight of internet service, most notably precluding imposition of a “net neutrality” requirement. In an appeal under the Administrative Procedure Act, the D.C.

Unfair and Deceptive Acts and Practices: 8.5.4.2 Regulated Water Utilities

Rates of regulated utilities (“just and reasonable rates”) fall squarely within a state utility commission’s rate-setting authority. Claims involving rates are thus more likely than other claims to be found exempt from state UDAP laws.572 On the other hand, the UDAP statute is more likely to apply to a regulated utility if the practice involves something other than rates.573

Unfair and Deceptive Acts and Practices: 8.6.2 Alarm and Emergency Response Systems, Other Emergency Devices

A burglar alarm installer engages in a deceptive practice by falsely claiming that a burglar who cut the system wires would still trigger an alarm, that the police would arrive in only a few minutes, and that a panic button would work even with the wires cut.608 Advertising that a heat detector will give “an immediate early warning” is deceptive where dangerous amounts of smoke and carbon monoxide can accumulate before the alarm goes off.609 The FTC has successfully challenged misrepresentations