Reliance takes legal action against National Home Services alleging unfair and misleading sales practices

TORONTO, Dec. 17, 2012 /CNW/ - Reliance Comfort Limited Partnership is suing National Energy Corporation (National Home Services), a subsidiary of Just Energy Group Inc. for $60-Million for using unfair practices and misleading representations including door-to-door selling practices that mislead customers.  Reliance believes these practices contravene the Consumer Protection Act and the Competition Act.

Media reports have stated that the Ontario Ministry of Consumer Services, which is responsible for administering Ontario's Consumer Protection Act, has received at least 52 separate complaints about National's practices in the first 10 months of this year. Water heater rentals represented the second largest number of complaints received by the Ministry of Consumer Services in 2011. The Better Business Bureau of Mid-western and Central Ontario has reported 92 complaints about National's business practices in the past 12 months and 178 in the past three years.

"This is an on-going industry issue and the practices of some other rental water heater companies have triggered hundreds of complaints from our customers who have had their account changed without knowing it or fully understanding the terms and conditions of their replacement provider," says Roger Rossi, President and CEO of Reliance Comfort Limited Partnership.

In addition a recent Ontario Superior Court judgment found that the door-to-door practices used by National were found to be in breach of the Misleading Advertising Sections of the Competition Act.

"We feel we must take action to protect our customers and stop these misleading door-to-door sales tactics used by National. Reliance must continue to take a leadership role to restore integrity for consumers," says Rossi.

Reliance's statement of claim alleges that National engages in the following practices:

• National sales people claim to be a government, utility or Reliance inspector in order to gain entry to the home
• National sales people claim existing water heaters are unsafe or not installed to gas code -- and that as a result their water heater needs to be replaced
• National claims that their water heaters are more energy efficient
• National claims that Reliance charges for certain maintenance services
• National misinforms consumers about their existing contracts saying they can cancel their water heater contracts for free. Most water heater suppliers have contractual cancellation fees. Reliance's account cancellation fees are among the lowest in the industry
• National sales people also do not reveal that consumers will pay higher fees if they switch to National

Reliance has also conducted a consumer education campaign to help Ontario consumers better understand their rights under the Ontario Consumer Protection Act. The campaign can be found at www.burnedatthedoor.com .  One of the measures Reliance has introduced to protect consumers and its water heaters is the use of a Removal Reference Number which ensures consumers can make a decision fully informed about the facts regarding their current water heater.

According to EnerCare "[t]his summer, an estimated 600,000 households in Ontario will be visited by door-to-door sales for a new rental hot water tank"¹.  However, despite the level of new entry into the Ontario markets and the vigorous level of active competition in the market, consumers are yet to benefit from lower prices.  In fact, according to the results of a Pollara survey of 1,203 consumers conducted in January and February 2011 and published by EnerCare 65 per cent of consumers, who switched providers after being approached by a door-to-door salesperson, saw their monthly water heater rental charge increase, 75 per cent of them by at least $3 per month or up to 25%.  This suggests that door-to-door sales tactics are misleading consumers into fixed term contracts with higher monthly rates and exit fees. It is unlikely that consumers are knowingly switching their water heater supplier only to pay significantly more for the same service and to tie themselves to more onerous terms and fees.

Reliance is a Canadian company with its head office in Toronto and employs approximately 1100 people across the country. Reliance offers two core product areas to its over 1.6 million residential and commercial customers: Heating, Ventilation, Air Conditioning (HVAC) and Security Services. Reliance Home Comfort provides retail sale, rental, service and maintenance of heating, ventilation and air conditioning equipment. Its water heater rental business, based largely in Ontario, is the largest in Canada. Reliance Protectron Security Services, the second largest security provider in Canada, provides security system sales, rental, installation, service, monitoring to homes and businesses across the country. Visit www.reliancehomecomfort.com to learn more.

¹ http://www.hotwaterfacts.ca/

SOURCE: Reliance Comfort Limited Partnership

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