Sumo slapped with $1.2 million in penalties for misleading energy plans

Melbourne-based energy provider Sumo has been ordered to pay $1.2 million in penalties after the consumer watchdog took it to the Federal Court for selling electricity plans that made false or misleading claims to Victorians.

The Australian Competition and Consumer Commission (ACCC) said Sumo misled customers between June and December 2018 about how much they would save by switching to the retailer.

Late last year, the ACCC instigated proceedings in the Federal Court which found Sumo had offered cheap rates and large pay-on-time discounts to attract new customers to sign up, while intending to increase its rates shortly after.

ACCC Chair Rod Sims said Sumo’s offers enticed consumers to switch plans for a better deal on something that was a major cost of living. Doing so while knowing prices would subsequently be increased was a breach of Australian Consumer Law, he added.

“Electricity bills are a major household expense and Sumo’s offers enticed consumers to switch plans in the belief they were getting a better deal,” he said.

“Businesses must not mislead consumers about the prices they will pay for a product or service. In this case, Sumo Power advertised large discounts to get consumers to switch energy providers, and did not disclose to these new customers its plan to substantially increase prices in the near future which would effectively erode or eliminate those discounts.

“The ACCC is extremely concerned by such behaviour.”

The ACCC noted that about 7,700 Victorian customers were impacted by Sumo’s rate increases, which added an extra $50 on average to their monthly power bills. This was largely due to Sumo’s promotion of plans with pay-on-time discounts as high as 44 per cent through third-party sales agents. These agents told consumers they were from an independent company ‘offering a comparison service of electricity plans’, despite the agents being employed by Sumo.

Initial proceedings against the retailer started in August 2020 after the watchdog alleged Sumo had misled customers.

Sumo has since made attempts to compensate affected customers – both former and existing – which is expected to cost the company $800,000 on top of its penalties. The electricity and gas provider has also ceased using the telemarketing agents employed during the period concerned.

Canstar Blue has reached out to Sumo for comment and will update accordingly if a company representative responds.

Compare Electricity Prices in Victoria

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. Costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision. The next three tabs feature products exclusively from AGL, EnergyAustralia and Origin.

Here are the AGL Energy plans on our database for Victoria. These are products from a referral partner†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are the EnergyAustralia plans on our database for Victoria. These are products from a referral partner†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are the Origin Energy plans on our database for Victoria. These are products from a referral partner†. These costs are based on the Citipower energy network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Image credit: ArtisticPhoto/Shutterstock.com

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