ComCom charges Mercury NZ for allegedly misleading customers

The Commerce Commission has filed seven charges against Mercury NZ Limited (Mercury) under the Fair Trading Act alleging false and/or misleading representations to some residential energy customers that were required to pay an early termination fee when they were not.

Mercury changed its terms and conditions in 2016, such that customers on a renewed term could terminate their plan without paying an early termination fee. However, the commission alleges that in spite of this change, Mercury represented both verbally and in writing to some customers terminating automatically renewed fixed-term energy plans between 2017 and 2020 that it was entitled to charge a $150 termination fee.

The commission also alleges that some customers were incorrectly told that an early termination fee would be charged if customers wanted to switch providers or that the fee would be waived if they remained a Mercury customer.

A Mercury spokesperson says it has co-operated fully with the Commerce Commission throughout its investigation and is working to ensure the matter is resolved as efficiently as possible for all concerned.

“The matter impacted 2055 customers between September 21, 2016, and November 30, 2020.

“We have focussed on making this right with impacted customers by sincerely apologising to them, refunding the early termination fee and making a small additional payment in acknowledgment of our error (completed in early 2021),” the Mercury spokesperson adds.

“In a small number of cases in which we have been unable to locate an impacted customer, we have set aside their unclaimed credit balance, and at the same time donated the equivalent of their unclaimed credit balance to the Starship Foundation.”

The spokesperson says that as the matter is before the court Mercury is unable to comment further at this stage.

Mercury had an obligation to ensure that its relevant staff were fully aware of the contract terms, including changes to those terms, and that the terms were adhered to, so that customers were not misled, says Fair Trading general manager Vanessa Horne.

“In our view, the complaint and our investigation revealed systemic problems inside Mercury that resulted in harm to customers,” she adds. 

“A number of customers were likely to have been misled and potentially out-of-pocket, because there were not robust systems in place.”

Horne says almost all customers who were incorrectly charged and paid an early termination fee have been refunded by Mercury.

“However, there may well be a number of other people who have remained customers of Mercury to avoid the early termination fee – which is not fair on them or potential competitors in the retail energy market.”

Horne says this case is an important reminder of the need for businesses to ensure they have appropriate systems in place to meet their obligations under the Fair Trading Act. 

“We saw this case as a critical one to take because it is about businesses needing to put the right systems in place. Things like thorough staff training and robust billing processes are imperative to assist in avoiding these situations in the future.”

The commission says it cannot comment further while this case is before the court, with the first appearance scheduled for August 16, 2022.

Mercury is the third largest retail electricity provider in New Zealand, providing electricity and gas services to about 300,000 residential customers.

Click here to view Commerce Commission media releases.