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Contact faces court action over 2017 Smartfuel discounts

Tuesday 2nd April 2019

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Contact Energy is being taken to court by the Commerce Commission for the way it advertised new price plans with its AA Smartfuel discounts in 2017.

The new plans, launched in April that year, replaced the firm’s involvement in the Fly Buys loyalty scheme. They offered discounts ranging from 10 to 50 cents per litre every month. Customers joining the one-year Fuel Rewards plan, which offered a 30-cent discount, could save up to $180 a year, the company said at the time.

The Commerce Commission has brought seven charges under the Fair Trading Act. It alleges Contact failed to adequately disclose key information in the advertising, including that the discount was only accessible once per month, that rewards could only be redeemed on one fill and were limited to a maximum of 50 litres of fuel. 

The case will be called in the Wellington District Court on April 29 and the commission said it wouldn’t comment more.

Contact is the country’s second-largest power retailer and has lost almost 39,000 customers in the past five years. Like most of the major firms, it has had to work harder in recent years to offer greater value to consumers – through better rewards and new services like broadband – rather than competing on price alone against lower-cost, new-entrant players.

In the three months following the Smartfuel launch in 2017, it added about 1,400 customers. That was about 25 percent less than in the same period a year earlier, according to Electricity Authority data.

In the past year, the Commerce Commission has closed about 30 investigations under the Fair Trading Act, resulting in the issuing of 10 warning letters and 13 court prosecutions.


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