Beware The Direct Energy Rewards Program!

The boys at Direct Energy (DE) have been busy with another “Gotcha” bear trap.  This one is not only aimed at catching new customers, but also trapping current customers.  I present to you, the Direct Energy Rewards Program, which they are pushing many current DE customers to enroll into.  Enrollment for non-Direct Energy customers also requires signing a Direct Energy water heater rental contract.  For existing customers enrollment is free..

In the promotional material (handouts), it highlights many “FREE” and preferred pricing on a range of products & services (of course under their terms & conditions).  They also highlight no enrollment membership fee, as well as automatic entry into various draws for prizes (of free products, plans, and maintenance services).  The promotional material talks a lot about the membership benefits (“free” and preferred pricing), and myths regarding water heaters, but never mentions the important terms & conditions (T&C) of the rewards program itself.  Their “benefits” are also not limited to just water heaters, but extend also to furnaces and other items, plans, & services.  I have little doubt that this will end up pressuring the member to sign up to fixed energy contracts at a later time.

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After reading the terms & conditions (T&C) fine print from their website, the “rewards” program is actually a separately run program, that is different from Direct Energy water heater contracts.  This program requires the customer to also enroll in the “rewards” membership for a 5 year term. I’ve never heard of a rewards program that requires a member to sign a contract for 5 years.  Under the 5 years DE can legally change any aspect of the program T&C, at any time, without notice being sent to the member. Changes will be posted to their website, and be deemed notice, where notice is required.  This means that if you (as a member) do not check the website for changes, it becomes your problem.

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The Catch:

The catch here is that they are hoping you will use their so called “benefits” of “free” or preferred pricing services, or even use a service that has been “won” from their membership draw prizes.  Many of the benefits may also require additional upgrade, repair, or other extra costs (paid by member) if they find it necessary in order to perform the benefit, especially for those involving installation or maintenance benefits.  When you use these benefits (products, plans or services) regardless of whether they were free, preferred pricing, or a prize, and then later decide to terminate your rewards membership before 5 years, you must pay the full retail value (currently unspecified) of the benefit redeemed.  The retail value is up to the sole discretion of Direct Energy (i.e. can really be any price they determine).

If your regular DE water heater contract ends, your rewards membership automatically terminates as well.  When this happens before the end of the 5-yr reward period, you owe the full retail value of any of the above mentioned benefits (free/preferred-price/prize services) that you redeemed.  Don’t forget that at anytime during the program they can change the T&C.  This means that if you redeem one of the benefits early in the membership years, the cost/value may change by the time you want to (or automatically) terminate the rewards membership.

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But wait, there are more goodies …..  the member is deemed to be in agreement with the current T&C for enrollment, if the customer agrees verbally where enrollment is over the telephone with a customer service representative and they are advised by the rep that the T&C are posted on the website, or advised that it will be mailed to the member later.  Sneaky phone representatives are able to mislead customers very easily in this way, and just refer the customer to the website.  Also, first time usage of any of the reward program benefits (free/preferred-pricing/prizes) constitutes agreement to the current and any changes to the T&C.

All decisions regarding the interpretation of the T&C, and any disputes are to be resolved by DE at its sole discretion. They also mention that all decisions are final and binding on all members of the reward program.  This means by agreement to the contract, you allow them to have final say on everything, and let them do anything they want to.

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Their Strategy:

Because it is very likely that an existing DE customer’s 5yr water heater contract will not overlap completely with enrollment into this separate 5 yr rewards program, they are hoping customers will use the benefits.  Then when renewal of their 5-yr contract water heater contract comes to an end, they will either have to renew their contract or end up paying full retail value of the benefits used (plus any changes made to the rewards program T&C).  They are hoping that instead of paying enormous service charges and maintenance fees owed for the benefits redeemed, customers will opt for re-signing another 5-yr Direct Energy contract!  This basically ensnares the the Direct Energy customer for a decade!

They don’t mention any Direct Energy contract other than the one for rental of the water heater, but I’m sure they will be able to some how link conditions to natural gas and hydro, since their benefits include plans/services involving items other than water heaters such as furnaces, etc.   Also don’t forget that interpretation of the T&C is totally up to them, making it easier for them to link these together.

Don’t be fooled. They aren’t doing you any favors. Lets not forget that Direct Energy is a trademark of Direct Energy MARKETING Limited.  They are a marketing company, not an energy company.

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I’ve never heard of a company that makes a customer sign a 5-yr contract (for their energy services), without first letting them fully read the terms & conditions of the contract prior to signing it!!   The only other entity I can think of that does that …. is the Devil himself!

http://www.waterheaterrewards.com/Terms.aspx

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Thanks & Happy Investing!
The Investment Blogger © 2010

Author: The Investment Blogger

I’m a private investor, who developed the “function-centric investing” paradigm. I am an investor who blogs a little here and there, rather than a blogger who invests a little here and there. I'm passionate about investing and sharing investment knowledge!

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3 Comments

  1. Thanks for this. These guys call 12 times a day. I have a fancy new phone that I can enter their number into a block list but it still needs to ring once. Finally answered today and told them to quit calling. She explained the FREE offer and while she blathered I googled this article. Told her we weren’t interested. Thanks much!

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  2. Something about the wording of the Direct Energy “Rewards” flyer didn’t sit right and I’m vey glad I googled “water heater rewards” and found your blog. Thank you very much for this! This sort of corporate scam is really unconscionable.

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  3. Good info. Unlike the most folks, I always read the T&C’s on everything – your right what a ripoff! I’ve had so many issues with DE on locked-in Gas and Hydro rates..never ever again!!! I literally spent 2 years fighting my way out of their “contracts”. They actually ended up apologizing but nonetheless I calculated I spent in excessive of $2500.00 over 5 years paying too much compared to if I had simply stayed with the OEM providers.

    DE is the Devil.. Devils Energy!

    Skip the program, it isn’t worth it – no real benefits! I agree with the author of this blog, it is a ploy to get peps signing up contracts on their other programs…be aware! be very aware!!

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