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Columbia Ads Found to be Misleading in Michcon Pilot

February 8, 1999
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Columbia Ads Found to be Misleading in Michcon Pilot

Columbia Energy took a hit last week as the Michigan Attorney General stepped in to halt a misleading marketing effort by the company. Due to an objection by the Attorney General over the wording in a mail solicitation sent to Michcon pilot program customers, Columbia has consented to end the solicitation and give customers the option to choose other suppliers. Currently, Columbia has signed 12,200 customers away from Michcon.

The controversy stems from a promotion sent to residential customers stating, "Save this winter, when your gas cost is usually the highest. Lock in your low price now, when your gas usage is peaking." But the fine print on the back of the solicitation revealed that customer savings would not start until after the heating season in April.

"I will not tolerate advertisements that mislead Michigan's consumers. While this solicitation never should have been sent in the first place, I commend Columbia Energy for its quick response and its promise to pull the advertisement and allow customers who may have been misled to opt out of the program," said Jennifer Granholm, Michigan's Attorney General.

"I'm embarrassed" by the promotion, said Columbia President and CEO Oliver G. "Rick" Richard III. It was an "inadvertent" mistake, but "you can believe there have been some people chewed out in my operation for it." He conceded that certain mistakes are bound to happen. "This is a whole new game of marketing, and people need to be ever vigilant about things like that."

Michcon's three-stage pilot program began in January. Open on a first-come-first served basis to all 1.2 million Michcon customers, the pilot program allows 75,000 people to shop for gas each year for the duration of the program.

This marks the second time Columbia has had trouble with a Michigan pilot program. Over the summer, a Semco spokesman said, a telemarketing agency Columbia employed used "definite misrepresentations" to try and sign commercial and industrial customers. "It is unclear if the fault is Columbia's," the spokesman said. "It might have just been an overaggressive agency. But it was a significant enough problem that we contacted Columbia about it, and like this situation, they acted responsibly."

John Norris

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