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Post date: July 22 2004

Nyc Heating Oil Company To Alter Unfair Contracts

State Attorney General Spitzer today announced a settlement with a Brooklyn-based home heating oil company that imposed unfair contract terms on consumers.

Consumer Energy Group, Inc. (CEG) - which serves Brooklyn, Queens and Nassau Counties - and Anthony Losquadro, the owner and operator of the company, settled the investigation commenced by Spitzer's office after receiving numerous complaints from former customers who were being sued by the company for terminating unconscionable contracts.

"My office will continue to vigilantly protect consumers who are unwittingly pressured into entering contracts with unconscionable terms," Spitzer said. "It is particularly galling that CEG would attempt to take advantage of consumer who are seeking to obtain a basic and necessary service--home heating oil."

An investigation by Spitzer's office revealed that CEG convinced consumers to enter into long-term contracts -three to five years in length - for oil delivery and service with the false promise that they could receive discounted oil prices because of CEG's membership in a special "buying group."

The contracts, however, favored CEG to an overwhelming degree. Specifically, the contracts frequently placed little or no restrictions on the amount CEG could charge for oil and relieved CEG of any obligation to deliver oil in a timely, responsible and safe manner. In addition, the contracts made consumers liable for any damage caused by CEG. Customers who cancelled their contract because of the company's poor service were charged exorbitant cancellation fees. Customers who did not pay these fees were frequently sued.

Some customers complained that they were rushed into signing long term contracts without having the opportunity to review all the contract terms. Several non-English speaking consumers said that CEG sales representatives described the contract terms in their native languages, but forced them to sign contracts written in English that contained additional, undisclosed terms.

Under the terms of the settlement, CEG is prohibited from using high pressure sales tactics and deceptive practices to induce consumers to sign contracts. Also, CEG must:

  • Set forth the amount a consumer will be obligated to pay for oil for the duration of a contract and may not misrepresent the cost of its goods and services or the savings available to consumers by contracting with them;
  • Offer one-year contracts in addition to multi-year contracts;
  • Maintain responsibility for damage or injury caused by the action or inaction of its employees and agents;
  • Provide all contracts clearly written in the language the consumer is solicited; and
  • Stop charging penalties to consumers who breach their contracts with CEG unless the breach was without cause. Even then, CEG's recovery is limited to its actual damages resulting from the breach.

CEG agreed to discontinue all efforts to collect money from former customers who filed complaints with Spitzer's office and will not seek lost profits in excess of $500 in future contract termination matters.

CEG agreed to pay $20,000 to Spitzer's office to be used as restitution for consumers who were charged excessive cancellation fees and to pay another $10,000 in penalties and costs.

Individuals wishing to file complaints against CEG are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.

The case was handled by Assistant Attorney General Philip Grant of the Nassau Regional Office and Assistant Attorney General Jane Azia of the Consumer Frauds and Protection Bureau. Assistance was provided by Lois Booker-Williams, Assistant Attorney General in Charge of the Brooklyn Regional Office and Assistant Attorney General Sandy Mindell of the Consumer Frauds and Protection Bureau.