The Australian Competition and Consumer Commission (ACCC) has kicked off legal proceedings against telco Amaysim in the Australian Federal Court, claiming false and misleading marketing claims concerning discounts on its energy brand.
According to the ACCC, Amaysim's Click Energy breached Australian Consumer Law by representing to Victorian and Queensland customers between October 2017 -- when it launched services -- and March 2018 that they would be able to obtain discounts of between 7 percent and 29 percent by paying their bills on time.
However, these discounts were false or misleading because they applied to the company's variable market offer rates, which were higher than its standing offer rates, the ACCC alleges.
The misrepresentations about savings consisted of Click Energy telling consumers they would save a certain amount by switching to the provider. According to the ACCC, Click Energy had "no proper basis for these representations".
"When compared with Click Energy's standing offer rates, the discounts were much lower than advertised. In some cases, there was no discount at all," ACCC Chair Rod Sims said.
"The advertised savings were based on the amount a consumer could save with Click Energy by paying on time, and not on any estimate of savings a consumer switching from another retailer would obtain," he added.
"We believe that Click Energy's conduct is among the worst practices we see in retail electricity marketing. We allege that consumers were misled about discounts and savings, with some consumers not getting any discount or savings at all."
The regulator is seeking injunctions, pecuniary penalties, declarations, publication orders, and costs from Amaysim through the court action, as well as allowing customers to exit their plans without penalty fees.
On launching its energy plans last year, Amaysim said it was aiming to scoop up customers with its "amazingly simple" proposition.
"What matters to Australian consumers is clear -- they want simplicity, convenience, and great value from their energy retailer, and they don't want any surprises," Amaysim CEO Julian Ogrin said at the time.
"With 93 percent of our mobile customers saying they would recommend Amaysim to their family and friends, we aim to translate this positive experience to our new energy customers."
Amaysim had announced its AU$120 million acquisition of Click Energy in April last year, which it said was part of its long-term strategy to become the "remote control for the smart home".
At the time, Ogrin told ZDNet energy is the "most logical vertical" to complement the company's mobile and broadband products, and that the acquisition of Click reflects the telco's recognition of the opportunity for a "mobile virtual network operator (MNVO) of energy".
Amaysim reported making AU$153 million in revenue from its energy offering for the first half of the FY17 financial year, and AU$7.8 million earnings before interest, tax, depreciation, and amortisation (EBITDA).
Amaysim had 185,000 energy subscribers by the end of December.
Amaysim co-founder Peter O'Connell will be CEO on July 1, following the departure of current CEO and MD Julian Ogrin for Foxtel.
The budget mobile operator has reported a net loss after tax to the tune of AU$237,000 for the first six months of the 2018 financial year.
CEO and MD Julian Ogrin to leave Amaysim by the end of the week.
With the seven year-old company completing its shift to AWS, it is able to continue tackling the Australian telecommunications and energy sectors.
After launching NBN and SIM-only mobile plans already this year, Amaysim has provided information on its energy plans as it aims to become a household utility supplier.
Amaysim is in discussions with providers to expand its fibre reach across the country, while also planning to connect directly to some of NBN's 121 POIs this year.
Amaysim's new SIM-only plans up the stakes by offering more data for less money alongside an emphasis on customer service in a bid to take customers away from the big three mobile providers.
While its current NBN plans cap out at 100/40Mbps, Amaysim said it will bring in higher-speed services once it is economically viable to do so, with 1Gbps plans to be considered.
Amaysim agreed to pay AU$120 million to acquire online energy retailer Click Energy as part of its strategy to expand into new verticals and offer bundled offerings.