Fuller Oil customers get reassurance on deliveries
'It was a very reassuring meeting, and I was very impressed with how he was willing to meet with us right away, be very forthcoming with us, and that reassured us,' said James Boffetti, senior assistant attorney general in charge of the consumer protection bureau.
Fuller Oil has 400,000 gallons of oil in storage, which is about half of what Fuller expects to deliver through prepaid commitments to consumers, Boffetti said.
Both the attorney general's office and New Hampshire Union Leader were contacted by concerned consumers after an article last Thursday reported that the U.S. Internal Revenue Service has placed $2.57 million in tax liens against Frederick J. Fuller, who is president of Fred Fuller Oil & Propane Co. Inc., which is based in Hudson.
'It appears that Mr. Fuller has the resources to pay off these liens and to resolve his tax issues,' Boffetti said. 'Because of the fact that he has this storage capacity, that also provides us with additional assurance.'
'He has on hand 400,000 gallons of home heating oil,' Boffetti added.
Fuller told the New Hampshire Union Leader last week he had a meeting set for Monday with the IRS, but he did not immediately return a phone call Monday afternoon.
Boffetti said the issue raises the larger question of whether current protections for consumers who buy prepaid oil contracts are adequate.
Consumers in the state have lost more the $1 million in recent years from business failures as well as business owners' deaths, including a suicide. The list includes Rumford Oil of Concord, Flynn's Oil of Exeter, Jackson Energy of Keene, and JDC Oil of Newmarket.
In the case of Munce's Superior Petroleum, the state sued the firm in July 2010 over prepaid heating oil contracts and succeeded in getting the company to post a bond, which protected consumers, Boffetti said.
But there is no requirement that oil dealers escrow money they hold for prepaid contracts, he said. That allows dealers to commingle prepayments with their general business funds.
Instead, dealers have three options for the money they hold. They can buy a futures contract, post a letter of credit, or get a surety bond.
'Ninety-nine percent of the companies use a futures contract,' Boffetti said. 'A futures contract is a contractual promise to buy oil from a supplier at a future date.'
There is no money transferred and no guarantee the oil will be purchased, he said.
Boffetti would like to see a system for prepaid oil contracts similar to that for landlords who must escrow, or place in a separate, dedicated account, funds they hold for tenants' security deposits. Banks similarly escrow property tax and insurance payments for homeowners as they pay back their mortgage loans.
A Senate bill to strengthen consumer protections for consumers who prepay for oil was killed by the House in May 2011. The attorney general's office did not support a weaker House version.