Door to Door Sales with IPads

Thought I’d share this story from the April issue of the Texas Retail Electric Scorecard, given today’s Open Meeting discussion.


I have been following the filings in Docket 44518, the Petition of Accent Energy Texas, LP for a Good Cause Exception to PUC Substantive Rule §25.474(f)(2) and (3).

In their original petition, Accent Energy states they are seeking a good cause exception “to allow cus- tomers the option of choosing a retail electric product via a hand-held electronic device without requiring the customer to participate in a recorded third-party verification voice call.”

The rules for door to door enrollments in Texas require that the authorization disclosures (name of REP, price, term, cancellation fees, etc.) be disclosed either on a written LOA pursuant to §25.474(e) or telephonically pursuant to §25.474(h). Further, the verification elements (applicant and account holder’s names, addresses, language preference, and consent to enrollment) are required to be performed telephonically. Most importantly in these requirements is the prohibition of “a REP or its sales representative from participating in the verification process.”

Accent’s Proposed Enrollment Process
An Accent agent will conduct an electronic enrollment with the customer via an internet protocol on the mobile hand-held electronic device. Specifically, with an Accent electronic enrollment:
1) The customer selects a product and enrolls with Accent Energy through the handheld device;

2) When a customer chooses to enroll in this manner, the electronic hand-held device utilized with the enrollment verifies the customer’s consent to the terms and conditions via an electronic signature of the customer that is captured as a digital image.

3) The customer inputs their personal information, including e-mail address, directly into the hand-held electronic device which acts as a portal into the Accent Energy Customer Information System without separate disclosure of sensitive information to the Accent employee.

4) The hand-held electronic device also verifies via an electronic signature that the customer consents and acknowledges the specific statements set forth in the requirements of P.U.C. Susbst. R. 25.474;

5) After verifying the customer’s consent and desire to choose the selected product, the terms of service, EFL, and Your Rights as a Customer document are e-mailed to the customer; and

6) As stated in the information sent to the customer in compliance with the Commission rules, the customer has the right of rescission to withdraw their enrollment for a period of 3 federal business days.
The enrollment process also gives the customer the option to receive a physical copy of the terms and conditions and applicable acknowledgement form. If the customer requests traditional hard- copy documentation, those documents are provided to the customer at the time of enrollment and a third-party verification call is conducted in order to complete the enrollment.

While technology can improve the quality and consistency of the sales presentation, it cannot overcome the ability of disreputable agents to engage in fraudulent enrollments.

Accent’s Plea
To the extent the above-identified rule provisions would require a customer to participate in a recorded third-party verification call after the customer has chosen to participate in an electronic enrollment via the electronic hand-held device through the detailed process described above, Accent Energy requests that the Commission find good cause to waive that third-party verification requirement. Good cause exists for this waiver because the technology in question did not exist at the time the rules were adopted. Further, the technology which Accent Energy seeks to utilize affords additional consumer protections that are not available with the door-to-door options that were available at the time the current rules were written. Indeed, Accent has structured the customer protections around this program in a manner that exceed the general door-to-door protections. Allowing customers to utilize the technology developed by Accent without a separate recorded third-party verification call will effectuate choice, will enhance the customer experience, and will benefit customers.

My Thoughts
The rule in §25.474(e)(5) states that the LOA (Letter of Authorization) shall disclose the following information (and then the specific authorization disclosures are delineated). Therefore, the rule appears to require the presentation of the authorization disclosures to the customer in writing as 25.474(e) further defines an LOA as “written”. I should further note that the term “in writing” is already defined in the customer protections rules ~ §25.471(d)(8) as “written words memorialized on paper or sent electronically.” As such, you could have an electronic LOA that presents the authorization disclosures outlined in §25.474(e)(5).

Clearly the PUCT’s rules already understand that there are 3 mechanisms by which an applicant can provide their consent and authorization to enroll: via the internet, with a signature on a document, or telephonically. Separately, there are only 2 general locations where sales can occur: either in the applicant’s home (or place business) or elsewhere. The rule at issue here is that which specifically deals with sales that occur at a residential applicant’s home, i.e. §25.474(f). It is clear that REPs could use electronic devices to process an enrollment in other sales venues. Also it is clear that internet enrollments are meant to initiated and completed by applicants and that such interaction could occur at any location where the internet is available. Telephone enrollments can also be initiated or completed on any telephone to which the applicant may have access. Likewise, written enrollments could be obtained anywhere (a mall, store, or public event).

Clearly, by specifying additional requirements for door-to-door sales, the PUCT believes this particular sales venue warrants additional protections. Why is that? It is the only sales venue that could potentially not have any other means of confirming the specifics of what the sales agent told the applicant at the point of sale. Telephone calls can be recorded. Internet websites and emails can be archived. However, there is no way to prove what an agent did (or did not) tell an applicant while at the applicant’s home. Additionally, in all other sales venues, the applicant can leave the sales transaction at any time. Applicants can hang up the phone, walk away from a vendor sales booth, or close their browser window. However, applicants cannot leave their home to flee an aggressive sales agent, nor can they easily force an aggressive agent to leave their property.
It is also important to acknowledge that sales agent fraud does exist. Agents have been known to forge applicant signatures and pass themselves off as applicants on phone calls. There is simply no way to elim- inate agent fraud completely. The best that can be done is to minimize its likelihood by implementing steps where such fraud is most likely to occur, such as an applicant’s premise. The reason that door-to- door regulations exist is to both provide the applicant with some protection from overly aggressive sales agents who are simply not willing to take no for an answer and to deter agent fraud.

While I think electronic devices like IPads have their place in the sales transaction, they too suffer from the all to easy ability of an agent to fraudulently enter enrollment information on behalf of the applicant. At the end of the day, the IPad is simply an electronic LOA. There’s no way of proving the applicant com- pleted the LOA versus the agent even if an electronic signature is obtained. A required telephone call to the applicant is simply another protection element that is useful in both deterring and identifying fraudu- lent agents, as well as protecting applicants from aggressive sales agents. That’s why it is, and should continue to be required for door-to-door sales.

We’ll see where the Commission comes out on Accent’s petition.

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