CONSUMER FORUM

New law gives consumers recourse with businesses that don’t honor prepaid heating oil contracts

Posted Sept. 30, 2012, at 7:49 p.m.

In February 2011, five credit unions said they would be doing something few financial institutions do: make no-interest loans of up to $2,000.

The unusual move was in response to what one credit union official described as a crisis situation. In January, Thibeault Energy of Brunswick suddenly had shut its doors, despite the fact that at least 400 customers had prepaid for heating oil. That fuel was never delivered.

Many of those customers needed help, since they had no additional funds set aside for fuel. It’s likely that most of them took it on faith that the company would have enough fuel to deliver at the agreed-upon price during cold weather.

But the energy picture was cloudy two years ago. Prices were far from stable, and that on top of a continuing credit crisis forced more than one dealer out of business. Hundreds of other customers who prepaid various oil dealers were left wondering where the oil truck was, and whether they would be able to afford to have another company’s truck fill their tanks.

At least some of that uncertainty might have been averted had consumers asked their dealers some specific questions. The Maine attorney general’s office advised citizens to do just that as far back as 2008. “Ask them to explain how they’re going to get oil for the winter,” urged Linda Conti, an assistant attorney general.

State law at that time barred fuel dealers from offering prepaid contracts, unless they had one of three kinds of financial safeguards:

• A contract with a supplier guaranteeing a fixed price for at least 75 percent of the gallons the dealer held contracts for.

• A surety bond for at least half the amount customers had prepaid.

• A letter of credit for the full amount those customers prepaid.

Earlier this year, the law was strengthened. Now, dealers must register their intent to offer prepaid contracts with Maine’s Department of Professional and Financial Regulation by June 30 of each year. They must follow that up with a report by Oct. 31 showing how they will honor those contracts. You can find a list of the dealers who have registered and details on the new law (LD 1895, An Act To Protect Consumers by Strengthening the Laws Governing Prepaid Home Heating Oil Contracts) at the department’s website, http://www.maine.gov/pfr.

Also, the new law requires the commissioner to report to the attorney general the names of any registered dealers who do not provide the required report or who make false statements on that report. Violations are considered a breach of the state’s Unfair Trade Practices Act.

We urge consumers who are considering prepaid heating fuel contracts to do their homework and ask questions before they sign any agreements.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, visit http://necontact.wordpress.com or email contacexdir@live.com.

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