Posted on 05/23/2021 3:33:45 AM PDT by fwdude
I recently helped elderly mom find a new electric provider through one of the popular website markets. The provider chosen accepted her application and began providing service. But 5 days later she received a letter from them demanding a $500 security deposit or her service would be disconnected.
Assuming this letter is legit, is it legal to demand such a hefty security deposit after service is established, instead of assessing credit risk at the time of application? Could they be trying to scam her because of the recent power problems Texas experienced hit them financially? They are saying that the deposit will be refunded after one year with interest. Mom has decent credit and hasn’t required a deposit with other utilities.
That wouldn’t be normal in my mind but I’d definitely review the website and paperwork filled out because it would have to be in there up front not an add on after the fact.
“…Assuming this letter is legit…”
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I wouldn’t make that assumption. Wouldn’t any such charges be part of their normal billing methodology?
I used to move every 3-5 years. When I moved to a new area, the security deposit was a requirement to get service.
Happens all the time. They sign you up first then do a credit check. I couldn’t get electricity turned on without a huge deposit due (several hundred) to a low credit score.
You get the deposit back after 6 months.
I’m not assuming the letter is legit, and the more I think about it the more suspicious I get.
The most I’ve ever seen required for a deposit, with decent credit, is $250. This usually is enough to cover one billing period in case of default.
Depends on the state it seems: https://www.reddit.com/r/personalfinance/comments/2i4tks/my_new_electric_company_wants_a_security_deposit/
No, this doesn’t happen all the time. They do the credit check up front at the time of application and then let you know that ACCEPTANCE of a contract requires a security deposit. That gives the applicant the chance to accept or decline.
In our state (MA) this is apparently not allowed, but read your terms of service. And find out if they pay interest on the deposit. And just what is it for? What is the name of the provider?
Priority meter installs: Recent phone scams reported to PSE&G include demands for payment for past-due bills, discounts for good payment history or requiring a deposit for a priority meter installation. PSE&G does not require a deposit for meter installations. Often scammers will threaten to disconnect electric service if payment is not made immediately. These scammers often demand payment through a pre-paid cards or Bitcoin. If the victim takes the bait, the scammer provides a telephone number where a fake representative requests additional information that completes the fraudulent transaction. - https://nj.pseg.com/newsroom/newsrelease209
Companies in Texas aren’t regulated, so they pretty much do what they want. But call the company ans ask them if they actually sent the letter.
Many will do a soft hit credit check. I’ve had a perfect credit score for years and so don’t want a hard hit inquiry dropping it by 10-15 points and so make sure they sware by a blood oath that it is a soft hit. It’s possible that they did a hard hit after starting service and something came up differently and lower.
If your mom gets a letter from her previous e provider stating her account is in good standing and no late payments in the last twelve months, almost all will accept that to waive the deposit requirement.
I’m impressed she has a choice of electric companies. That’s rare. We have absolutely zero choice in Florida. Water too. One choice.
Most utilities will tell you up front or if they have a family member in good standing that will vouch (co-sign) for the person, they’ll wave the deposit.
I agree that I would call and verify and ask them for a copy of their policy. Find the phone number by going to the website, not the one on the letter in case it is a fraud.
That sounds like bait and switch.
I would definitely challenge it with the company and read them the riot act about not being up front with that information.
Xcel Energy in Colorado did.
In Texas we have dozens.
Check this out. Just search for a Dallas or Houston zip to plug in.
That is amazing. I added my zip code in Florida. No results. Lol. We do not even have.two choices. You are hooked up to SECO and that’s it. Our water is the same. My water bill was 134 dollars for April. Probably the most expensive water in the country. We do have to water our grass or we’d have none. HOA would not be pleased.
Deregulation is a double edged sword. The cheap rate is only guaranteed for a specific period. After that time runs out the customer is exposed to market rates.
The bills for thousands of dollars received by some customers are examples of the downside.
That happens when the electric provider doesn’t have enough power and has to buy on the open market. At that point it’s rape and pillage of the buyer (electric provider) which gets passed onto the customer.
Given the downside experienced by some customers in Texas, you’re lucky Florida didn’t deregulate.
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