(Originally posted at LinkedIn.com)
Last week, we introduced Part 1 of our two-part discussion about the importance of retail electricity and natural gas suppliers complying with state laws. We focused on requirements in the contract, the contract summary, certain required disclosures, and so forth. This week, we’ll hit on items relating to marketing, such as your company’s marketing materials, telemarketing, and door-to-door activities. Our lawyers are counseling retail suppliers daily on these and other regulatory issues, so please feel free to contact us at (804) 864-1100 if you have any questions or desire additional information.
Have you checked your marketing materials?
Marketing materials are the primary means of communicating offers to prospective customers. It’s safe to say that all states require marketing materials to contain accurate information and not mislead customers. Additionally, states differ in their requirements that the materials include certain information in specific circumstances. In Pennsylvania and soon in Delaware, if you quote a price, you must also provide a table showing the price per kWh for an average residential customer (and small commercial in Delaware) using 500, 1,000, or 2,000 kWh of electricity. Most states require other disclosures such as a license number and that the state commission does not regulate the supplier’s prices. You want to make sure that marketing materials used in specific states follow that state’s requirements.
Are you training your agents properly?
In the past few years, states have revised their rules to include specific areas of training for supplier’s agents, including telemarketing and door-to-door agents. Roughly, there are about 12 topics that must be included in agent training. Those topics include certain state and federal laws and can include local laws as well. When we review training materials, we recommend a robust slide deck and reference materials that can be produced to a state commission or a public advocate if necessary to show the extent of the training. Many suppliers will require the agent to sign a verification form that he or she completed the training. Some suppliers require a test at the end. What’s in your company’s training materials, and are you ready to produce the documents if you are required to do so?
What’s in your telemarketing sales scripts?
Are your telemarketing agents adequately explaining the product and the material terms and conditions? Agents are generally required to discuss all material terms during the sales portion of the call, and some states have specific disclosures that the agent must make. Are you reviewing your telemarketing sales scripts periodically and ensuring they comply with state laws? Also, while some states require that you record either the sales portion of the call or the third-party verification, others require that you record both. And if you’re recording, in what manner and for how long are your maintaining the recording?
How about that third-party verification?
Many states are now including specific questions to be asked during the TPV. Maryland has a specific requirement that the sales agent not be present and that the TPV agent instruct the customer how to terminate the TPV without enrolling. There’s also an issue of when you need a TPV – states are different, and the TPV can also be done utilizing a process other than the telephone.
Can I cold-call thousands of potential customers and sign them up without a wet or electronic signature on a contract?
Not in Maryland, you can’t. This has tripped up more than one supplier. The Maryland Telephone Solicitations Act has specific exemptions, and if you don’t meet one of those then you have to obtain the customer’s wet or electronic signature to enter into a contract with that customer. If you satisfy one of the exemptions, there are regulations that still apply to the enrollment. This is a perfect example of the importance of knowing a state’s law before you start marketing.
Does my door-to-door contract meet state requirements?
There’s the substance of the contract (and the related Notice of Cancellation), but there’s also the formatting. We’ve seen suppliers get penalized for, or at least forced to litigate, issues such as not placing language in a contract where a statute says it must be placed, or for not putting specific language in bold, or for not providing a sufficient number of copies to the customer.
So there you have it – a list of compliance checks that is enough to get you started but not enough to ensure 100% compliance. If we tried to cover every item, our little two-part series would turn into a big fat book. The takeaway here is that there are a lot of rules in each state, and failing to comply with any one of them could land your company on the regulatory hot seat. As we said in Part 1, compliance is not sexy, but You Gotta Do It (tip: when playing this gif, hover your cursor over the screen, and on the bottom right you’ll see a volume button. Turn on the volume.).
GreeneHurlocker’s lawyers handle a broad range of regulatory and transactional matters related to electricity, natural gas, and water. Our lawyers work extensively with retail electricity and natural gas suppliers throughout the Mid-Atlantic. We’re also heavily involved in the renewable energy business, including solar, biomass and wind. We do other stuff, too. We encourage you to contact us with any questions.