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bait_and_switch_scamWhat is it?

The bait and switch is used in areas that allow homeowners to choose which source provider will supply them with electricity or natural gas. In areas that allow this, the homeowner can be switched over to a new service provider based off a promise of currently lower rates. Once the account has been moved over to the new source provider, the savings may not appear. If the new provider has a much larger portion of their purchased energy at spot prices, instead of long-term contract prices, there can be times the new provider will charge the customer much higher rates based on energy market conditions. Since many customers pay their bills without comparing them with neighbors, this discrepancy can go unnoticed for months or even years. Once the homeowner realizes the issue, it can take months, and sometimes expensive re-connect fees, to get things moved back to the original or a new service provider.

How does it work?

The salesperson contacts the customer via phone and lets them know they are eligible for a cheaper electric or gas rate. They will let the person know they will be able to save between 15% and 20%. They then ask for the person’s account number to evaluate their historical usage in order to calculate what the savings at their current rates will be. If the customer agrees to switch, they will move them over. If the customer doesn’t agree to switch, sometimes the salesperson will still transfer the account anyway.

Solution

Make sure customers understand that if someone calls and gives them a story that is too good to be true, it probably is. The savings may not be permanent, depending on market conditions. The new service also may not be as reliable as what they have become accustomed to having.

Contact NeonLink, LLC for effective ways to let customers compare their kWh usage and bills with the average of a relevant “peer group” of similar consumers every month. This program can also help reduce overall utility peak and annual demand by one to two percent.

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