National Grid's 'fake' bill row causes PR and direct marketing disaster in USA
National Grid, the giant British utility currently being investigated over its handling of one of the winter's worst storms in Massachusetts, is Front Page News in the state again this weekend. Documents sent to many customers at first glance seemed like bills. However, in reality they were anything but.
The mailshot with a National Grid logo that went out to householders in the Northeast USA, as part of a direct marketing effort to 3 million people, looked like a utility invoice, said the Boston Globe in a Page 1 report on Friday. There was a “Pay This Amount” box and the warning “Payable Upon Receipt”. Next was a demand for the “Total Due”.
Yet it was not a bill at all. Instead, it was a solicitation from HomeServe USA, which sells insurance coverage for repairs to furnace and plumbing systems.
On Saturday the Globe chose the subject for its main leader: “High on the list of consumer complaints are businesses that mail out solicitations disguised as bills. It is also a favourite scheme of scam artists. It’s shocking, therefore, that National Grid, a major provider of natural gas and electricity for the region, would allow its name to be attached to such a practice.”
Myles Meehan, senior vice president of HomeServe USA - subsidiary of another British firm – has denied in the Friday report that it was an attempt to dupe customers into paying a bill.
It bore no resemblance to a bill, he claimed. “I get bills and I’m sure you do too. They look very different.”
Susan Grant, director of consumer protection at the Consumer Federation of America, disagreed. She told the Globe the mailer appeared to intentionally confuse customers into thinking it was a demand from National Grid for payment. It includes a “reply by date”, option to pay by credit card, and a total: $191.20.
“If I received this, I would be surprised and angry to see that it’s actually not something that I owe. The way this is done, it just raises my hackles.”
It turns out the mailing by HomeServe USA was part of a direct marketing effort - done in consultation with National Grid and with National Grid taking part of the profits.
In Massachusetts, Attorney General Martha Coakley - already looking into National Grid’s response to a December storm - had received several complaints from consumers that the mailer "closely resembles National Grid utility bills" said her spokesman.
On the back of the page, in fine print, a footnote is the only clear reference to HomeServe. It says “HomeServe is not affiliated with National Grid or its affiliates; participation in the program is optional.”
The attorney general’s office is reviewing the complaints, said the spokesman. Coakley has the authority to take legal action against any business that engages in “unfair and deceptive marketing practices.”
He urged consumers to carefully review any solicitations or bills they receive from National Grid Energy Services or HomeServe.
HomeServe USA began working with National Grid last August when the company bought National Grid’s emergency heating insurance business for a reported $15.4 million, Mr Meehan told the Globe.
Part of the deal was that National Grid gave HomeServe USA the right to use its name and logo through 2011. HomeServe agreed to pay National Grid a percentage of every sale.
Neither company would disclose their profits from the programme or how many people had signed up for the “premier heat plan” costing $239 a year. (The mailing offered the service at a 20 percent discount, for $191.20.)
Meehan said that anyone confused by the offer would still have 30 days to review materials about the programme, and cancel if desired.
National Grid spokesman David Graves said all HomeServe promotional materials were reviewed by National Grid. He said none of the mailings looked like a bill. The Globe e-mailed Graves its copy.
He still said it did not look like a bill and was obviously an offer because it asked recipients to “reactivate your coverage.”
“I don’t think there’s anything misleading in here at all,” Graves said.
In the leader, Mr Meehan insists the company had no intention of misleading anyone and intends to “reformat” the mailing. "The US Postal Service and the state attorney general’s office should be watchful in case the company falls short," says the Globe.