6 Home Utility Company Scams to Beware Of (Water, Electric & Gas)

A few years ago, a couple of young people came to my door dressed in a uniform I couldn’t identify. They said they were from “the power company” and they were there because they’d been “getting calls from all [my] neighbors about why their bills are so high.” They then asked to look at my utility bill so they could see if it had a particular code at the top. If it did, that would mean I was being “double-charged” on every single bill.

It sounded pretty serious. It sounded like something that any customer who cared about lowering their utility bills would want to fix right away — which is probably exactly what those folks at the door were counting on. But instead of running to fetch my latest bill, I slammed the door in their faces.

Why would I do that? Because I happened to know their story wasn’t true. It was just a scam to trick me into switching power providers.

It’s just one of several scams related to your home utilities — particularly, your electric service. Some of them involve people coming to your door, as they did at my house; others are usually carried out by phone or email. Sometimes, they woo you with the promise of lower bills or better equipment, and sometimes they threaten you with having your service cut off. But in every case, what the scammers really want is to line their own pockets at your expense.

Here are six common utility company scams to watch out for.

Door-to-Door Sales Scams

Door To Door Sales Man Walking Discussing

Back in the 1990s, Congress gave the states the option to deregulate their energy markets. If a state chose to deregulate, consumers in that state would no longer have to buy their electricity from their local utility company. Instead, several companies would compete to supply electricity to them.

So far, 17 states and the District of Columbia have chosen to deregulate. In these states, consumers who choose to switch have two different power companies: a power provider that produces the electricity they buy and a power utility that maintains the grid. There are also 27 states where natural gas users can choose their gas provider.

The goal of deregulation was to create more competition for consumers, helping them lower their bills. Unfortunately, in the process, it also gave rise to a new type of scam: fake energy sales.

How the Scam Works

In states with deregulated energy markets, power providers sometimes market their products door-to-door. Salespeople come to people’s houses, let them know they have the right to choose a power provider, and ask if they’re interested in switching. In some cases, agreeing to this can be a good idea. It can allow you to buy electricity for a lower price per kilowatt-hour (kWh) than your utility charges, or to buy renewable energy for your home without the trouble of installing solar panels.

However, sometimes the people who knock on your door don’t just tell you about their products and offer you a chance to switch. Instead, they try to trick you into switching using a variety of sneaky tactics:

  • Teaser Rates. The salesperson tells you that you can qualify for a special, discounted rate, but only if you sign up on the spot. That encourages you to sign quickly without bothering to read the fine print. If you do, you’ll learn that this special low rate is only a “teaser” introductory rate that lasts for the first few months. After that, you keep buying your power from the same supplier, but at their regular, much higher rate.
  • Saying It’s Required. If you live in an apartment complex, a salesperson may tell you that everyone in the complex routinely selects a new power provider every year or every season. In reality, you can switch providers any time you want, and it’s never required.
  • Slamming. The most blatantly illegal practice these scammers use is called slamming, or switching you to a new power provider without your consent. Someone comes to the door posing as a representative from your local utility and asks to see your latest bill. Sometimes, they tell you there’s a problem with your account; sometimes, they say they want to see if you’re getting the best rate or paying an unnecessary charge, like the scammers who came to my door did. Actually, they want to see your bill so that they can copy your utility account number. Once they have this information, they can switch you over to another provider. Unless you look closely at your bill, you won’t even realize they’ve done it.

How to Tell It’s a Scam

You could protect yourself from this scam by refusing to open the door to anyone you don’t recognize or anyone in a power company uniform. However, some door-to-door energy salespeople are legit, and they might even be able to offer you a good deal. Here are a few ways to tell the real salespeople from the scammers:

  • They Won’t Identify Themselves. They say they’re from “the power company” or “your local power company,” but they don’t give an actual company name. Or they claim to be from your local utility, but they can’t produce any ID to prove it.
  • They Ask to See Your Bill. Anyone who’s really from your local utility should already know what’s on your bill. After all, they’re the ones who sent it. If they wanted to see a copy, they could just pull it up on their computer rather than come to your door and ask for it.
  • They Use High-Pressure Tactics. They admit they’re salespeople, but they then try to get you to switch providers without reading the contract. They tell you they’re in a hurry and need your signature right now, or they suggest that you don’t have a choice about switching.

What to Do

Here’s how to protect yourself from this type of scam:

  • Always Ask for ID. Don’t assume that a clipboard with a company logo, or even a company uniform, means that the person you’re talking to works for your local utility. Ask for real identification, such as a badge or card with a photo on it. If they’re really from the public utility, they’ll have ID.
  • Never Show Your Bill. Don’t show your bill to anyone, even if you believe they really are from the utility. And don’t provide any other personal information, such as your Social Security Number (SSN) or bank account info.
  • Always Read the Contract. If you decide to switch power providers, read the entire contract — fine print and all — before signing it. Look for details on the cost per kWh, how long that rate lasts, what happens when the introductory rate ends, and whether there are any sign-up or cancellation fees. If the salespeople pressure you to sign before you’re ready, don’t hesitate to shut the door in their faces.
  • Do Your Own Research. If you’re interested in switching power providers, don’t wait for someone to show up on your doorstep with an offer. Instead, do some research on your own to compare different providers in your area. That way, you can look at multiple providers and see which one offers the best rates. To get started, visit the website of your state board of public utilities or search for the term “energy choice” plus the name of your state.

Power Shutoff Scams

Electric Company Monopoly Pay Collect Money

Power shutoff scams are a type of phishing scam in which hackers pose as representatives of a company you do business with to get money from you. In this case, they pretend to be from the electric company, and their strategy for getting money out of you is threatening to shut off your power.

How the Scam Works

This scam can take several forms. Sometimes, you get an email that looks like it’s from the utility, claiming that the company is going to shut off your power because you haven’t paid your electric bill. In other cases, you get a phone call with the same information, or a person just shows up at your door.

However, the next part of the scam is always the same: The scammers say you must pay your bill immediately to avoid having your power shut off. Sometimes, they request your bank or credit card information. Other times, they ask for payment in a form that’s harder to trace, such as a wire transfer, prepaid debit card, or even cryptocurrency. Scammers who come to your door may even ask you to pay in cash on the spot.

In 2016, an ABC news team in West Palm Beach, Florida caught one of these door-to-door scammers on camera. He was pestering a homeowner about her “unpaid bill,” refusing to show ID, and repeatedly changing his story in response to her questions. When the criminal realized reporters were following him, he physically assaulted one of them before running away.

How to Tell It’s a Scam

Of course, real power companies do sometimes contact you if your bill is late, and they can cut off your power if you fall too far behind. However, there are several ways to tell a legitimate request from a scam.

  • They Come to Your Door. If someone shows up at your door to demand money, that should tip you off right away that it’s a scam. Your real utility company will not send someone to your home without alerting you beforehand. If your payment is late, they’ll usually notify you in writing.
  • They Demand Immediate Payment. Some companies may call you to let you know your bill is past due, but they’ll never insist that you pay immediately over the phone. Instead, they’ll tell you how to pay your bill through the company website or some other standard channel.
  • They Request an Untraceable Payment. Another red flag is asking for payment by wire transfer or prepaid debit card. Most utilities don’t even accept these forms of payment, and no utility will ever insist on them. So far, only one U.S. power company, GridPlus, accepts payment in cryptocurrency, and that’s only in certain parts of Texas.
  • They’re Angry or Threatening. Real representatives from your power company should be calm and professional, even if they’re calling you about an unpaid bill. If the email or the person on the phone takes a hostile or threatening tone, it’s probably a scammer.
  • You Know You Paid Your Bill. If you know you already paid your bill, you should be suspicious of anyone telling you it’s past due. Yes, it could be a mistake on the utility’s part, but it could also be a scam.
  • You’ve Received No Prior Notices. Even if the power company somehow never got your payment, they can’t simply cut off your electricity without warning. They have to send you a series of notices first, telling you about the overdue bill and giving you a date to pay it before they shut off your power. If this is the first time you’ve heard about your payment being late, it’s probably a scam.

What to Do

If you actually are behind on your electric bill, you want to make sure you pay it before your power gets cut off. If you get an email, phone call, or visitor threatening to cut off your electricity, here’s what to do:

  • Don’t Trust Your Caller ID. Even if the call appears to come from the real electric company, that’s no proof that it’s legit. These days, call spoofing software makes it very easy for spammers to make a call appear to come from any number they want.
  • Don’t Give Them Anything. Even if you think a call or email might be legitimate, don’t hand out any payment information or any other personal information. That’s especially important if you’re asked for an untraceable form of payment such as cryptocurrency, wire transfer, or prepaid debit. Once you’ve made a payment in this way, it’s almost impossible to get the money back.
  • Check Your Real Account. If you’re concerned that you may really be behind on your electric bill, contact the utility to check. You can log in to your account on the company’s website or call its toll-free number to check your account status. However, make sure you’re using the company’s real website or phone number as shown on your bill. If you click a link in an email, it’s likely to take you to a spoofed website that may look like the utility’s real site. Likewise, phone scammers sometimes tell you to call them back at a fake phone number that uses an exact replica of the real energy company’s recorded welcome message.
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