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Energy retailer asks Maryland Supreme Court to reconsider the Maryland Public Service Commission’s re-writing of the Maryland Telephone Solicitations Act

On March 31, 2021, the Public Service Commission of Maryland (Commission) issued Order No. 89795 which proposed to drastically re-write the Maryland Telephone Solicitations Act (MTSA) and, if permitted to stand, may fundamentally change the way business is conducted in the state. In Order 89795, the Commission was resolving a complaint filed by Commission staff against SmartEnergy, a Maryland retail energy supplier. The complaint alleged that SmartEnergy engaged in false and misleading advertising in connection with a mailing solicitation campaign that resulted in consumers calling SmartEnergy to sign up for the service advertised in the mailed postcards, and then subsequently becoming disgruntled with the service or the terms. Ultimately, the Commission found SmartEnergy had violated the MTSA and imposed penalties and sanctions, but Order 89795’s re-writing of the MTSA has much broader implications than just the issues and interests alleged in the complaint.

The MTSA is a consumer protection law that was enacted to protect Marylanders from telemarketers and merchants cold-calling and enrolling unsuspecting consumers into vague and un-memorialized contracts over the phone. Maryland law tasks the state’s attorney general with enforcing the state’s consumer protection laws, so there is a threshold question in this case of whether the Commission even has jurisdiction to apply and enforce the MTSA. Even if it does, in order for the MTSA to apply to a phone call between a merchant and a consumer, the solicitation call must occur “entirely” over the phone and be “initiated” by the merchant. The Commission’s Order in the SmartEnergy case seems to write out the prerequisites for the MTSA to apply. The Commission found that SmartEnergy’s solicitation started with the mailing campaign and that consumers called SmartEnergy in response to the postcards it sent. By the Commission’s own findings of facts, while part of SmartEnergy’s solicitation attempts, including consummation of the contract, occurred over the telephone, SmartEnergy’s “entire” sales attempt did not occur via telephone; similarly, it was the consumer, not SmartEnergy, that “initiated” the call and so, on its face, it is difficult to reconcile how SmartEnergy’s phone conversations are subject to the MTSA. Additionally, for calls that fall under the MTSA, in order to comply with the law, merchants are required to provide follow-up written contracts that lay out terms of the agreement. SmartEnergy provided written terms to the consumers that signed up for its service, but the Commission found the follow-up communications were insufficient.

The implications of the Commission’s Order are significant. If a consumer calls a merchant of goods or services to place an order or schedule an appointment – think take-out food or calls to the doctor, a lawyer, or a plumber – and a contract is formed over the telephone, under the Commission’s interpretation that phone conversation is subject to the MTSA. It means that to order a pizza, the pizza parlor is going to be required to provide a written contract with the terms and conditions for the take-out order memorialized. It will construct new barriers for Marylanders to conduct everyday business.

For these reasons, SmartEnergy has petitioned the Maryland Supreme Court to hear its case and revisit the Commission’s Order (and the appellate courts that affirmed the Order). Several amicus briefs have been filed in support of SmartEnergy’s request for the court to hear its case; a decision by the court about whether to hear the case is expected in the coming months. The case is In the Matter of SmartEnergy Holdings, LLC d/b/a SmartEnergy, Case No. SCM-PET-0363-2022.

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