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Access to Utility Service: 5.1.5 Calculating the Date of Payment

Many payment disputes, credit record battles, and potential shut-offs occur in the context of arguments over customers making or failing to make “timely” payments. In the utility context, the bill, usually sent monthly or bi-monthly, establishes the amount due and usually states the due date. The due date is sometimes established by the utility commission or by local regulations or company tariffs.24 By comparing this due date with the date of payment, customers or advocates can determine if the payment was timely.

Access to Utility Service: 5.1.7 Other Forms of Payment

Credit card and other electronic payment of utility bills, as well as paperless statements, are increasingly common. A consumer may have the right to dispute errors or problems with payment, though the extent of these rights will depend on whether the consumer used a credit card, debit card, or other form of payment.38

Access to Utility Service: 5.1.8 Payments by Others or to Agents

Acceptance of payment on a debt by a third person is equivalent to payment by the debtor.46 Thus, if part or all of a utility bill is paid by a customer’s friend, relative, pastor, guardian, social worker or by a governmental or other agency, payment is made as if by the customer themself. A refusal to accept payment by a third party would bring up the issue of good faith and fair dealing.47

Access to Utility Service: 5.1.11 Pleading and Burden of Proof As to Payment

If litigation around the issue of payment ensues, payment is an affirmative defense that should be pleaded.60 Generally, the burden of proof as to payment is upon the customer.61 Receipts showing payment in full or canceled checks are generally presumptive evidence of payment. Payment may also be proved by circumstantial evidence.62

Access to Utility Service: 5.2.1 Introduction

Because most utilities provide service before receiving payment, they may require, within reasonable limits, a deposit or other assurance of payment from applicants, from customers whose payment performance is unsatisfactory, and from disconnected customers who seek reconnection.63 The rationale for allowing regulated utilities to collect deposits is simple—“to ensure payment of service bills.”64

Access to Utility Service: 5.2.2.1 Generally

Even with a reasonable level of deposit, a utility may not arbitrarily pick and choose against whom to enforce a deposit requirement.74 Commission rules75 as well as state statutes76 often explicitly prohibit discrimination concerning deposits.

Access to Utility Service: 5.2.2.2.1 Overview

The Equal Credit Opportunity Act (ECOA)79 forbids “discrimination”80 against a person on any “prohibited bases”81 at “every aspect of an applicant’s dealings with a creditor regarding an application for credit or an existing extension of credit.”82 Prohibited bases are race, color, religion, national origin, sex, marital status, age (if old enough to contract), receipt of public assistance, or exercis

Access to Utility Service: 5.2.2.2.2 The “prohibited bases”

The ECOA prohibits discrimination based on, inter alia, race, color, religion, national origin, sex, marital status, age, and income based in whole or in part on a public assistance program.92 A “public assistance program” includes “any federal, state or local government assistance program that provides a continuing, periodic income supplement, whether premised on entitlement or need.”93 Examples of such programs include, but are not limited to, Temporary Aid to Needy Families (TANF), S

Access to Utility Service: 5.2.2.2.4 Enforcement

Private ECOA actions can seek recovery of actual damages.110 No maximum or minimum amount is placed on recoverable actual damages. Clearly, however, any out-of-pocket expenses would be recoverable as actual damages. Out-of-pocket expenses might include any transportation or communication costs incurred by the customer as a result of the violation, such as extra trips to the utility’s office or long-distance phone calls. Taking time from work is also considered an out-of-pocket expense.

Access to Utility Service: 5.2.4.1 Generally

Utilities often use third-party supplied information, such as credit reports, as a basis for cash deposit demands of households they deem to be non-creditworthy. Because of the differences between payment of most other bills and payment of utility bills, however, utility companies may have difficulty justifying deposits for some of these customers.

Access to Utility Service: 5.2.4.2 Are Credit Scores Fair and Reliable When Determining Access to Utility Services?

Private and public utility companies increasingly rely upon credit scores to assess consumer risk and determine whether consumers will receive utility services and have to pay a deposit for such services.129 It is difficult to quantify how many utility companies now rely on credit scores to determine access to utility services, but it appears to be a practice that is national in scope. Use of credit scores has existed in the credit context for many years.

Access to Utility Service: 5.2.4.3 How Credit Scoring Works

A credit score is a number generated from a system that numerically weighs or “scores” some or all of the factors considered in the decision to grant credit. There are numerous credit scoring systems.132 With utilities, credit scoring systems have primarily been used in decisions on whether to require a security deposit from applicants for utility services and how large a deposit to demand.

Access to Utility Service: 5.2.4.5 Accuracy of Information in Consumer Credit Files Puts into Doubt the Reliability of Credit Scores

Regardless of the model used by utility companies and the firms they rely on for credit scores, if the information in consumer credit files is inaccurate, so too are the consumer credit scores. Several studies have documented the problems with inaccuracies in consumer credit files maintained by credit reporting agencies.149 In 2002, the Consumer Federation of America (CFA) and the National Association of Credit Reporting Agencies conducted a comprehensive study of credit scores.

Access to Utility Service: 5.2.4.7 What Happens If Consumers Dispute Their Credit Score?

Applicants who are denied access to utility service, charged a higher rate for service, or required to pay a deposit for service because of their credit scores are often in the dark as to their right to dispute the accuracy of the score and information upon which it is based. Whom do they complain to if they dispute their credit scores or the credit history used to create the scores?

Access to Utility Service: 5.2.4.9 Necessary Safeguards When Credit Scores Are Used for Utility Services

Consumer advocates must remain vigilant about utility efforts to expand the use of credit scores in requiring security deposits and possibly for other billing issues. Issues of accuracy, reliability, fairness, and efficiency will be paramount in evaluating whether credit scores are appropriate for use in the utility context. With the increase in the availability and dissemination of credit information and the sophistication in which such information is analyzed and used, consumer advocates should ensure that certain safeguards are in place. Examples of safeguards include: