Mercury fined $279,500 by the Commerce Commission over its early termination fees

One of New Zealand’s largest electricity retailers, Mercury, has been fined $279,500 for breaching the Fair Trading Act with its early termination fees.

The Commerce Commission said it had told about 2000 customers they were required to pay an early termination fee when they were not.

Changes to Mercury’s terms and conditions in 2016 meant that customers cancelling an automatically renewed fixed-term plan would no longer be required to pay an early termination fee.

However, between 2017 and 2020 Mercury communicated to some residential customers, who were cancelling auto-renewed contracts, that they were required to pay the fee. Some customers were also told that the fee would be waived if they remained a Mercury customer.

Mercury issued invoices that incorrectly included the early termination fee, and on occasion made the misrepresentations via email or over the phone.

In a reserved decision released by the Auckland District Court on May 2, Judge Simon John Lance said the representations were a material departure from the truth that endured for a reasonably lengthy period.

The Commerce Commission’s general manager of fair trading, Kirsten Mannix, said its investigation identified problems within Mercury’s billing systems, resulting in representations that misled a number of customers.

The commission expected that all businesses, no matter their size, had robust processes and systems in place, she said.

Mercury is one of New Zealand’s largest electricity retailers. The company is listed on the New Zealand Stock Exchange and the Australian Stock Exchange, with the Crown holding a legislated 51%.

“It’s vital that staff are trained properly and told about any system changes or failures to ensure that consumers are only told correct information and are not misled.”

Mannix said businesses must ensure they gave consumers an accurate picture of their rights – whether that was in writing, or over the phone – and consumers should not be asked to pay for something where a payment was not due.

“Not only can misrepresentations like these cause stress and harm to consumers, electricity retail is an essential service, and the ability of consumers to switch providers in line with the contracts is vital to maintain a competitive market.”

Mercury refunded almost all customers who were incorrectly charged and paid an early termination fee.

If consumers thought they had been incorrectly charged an early termination fee, they were encouraged to reach out to their provider.