Lawmakers may seek reform in selling of pre-paid oil contracts
The state’s top consumer protection official warns prepaid home heating oil contracts are risky business which — in the last six years alone — cost customers of about a half-dozen companies more than $1 million in oil they bought but never received.
Now the current crisis involving Fred Fuller Oil & Propane Co. has spawned renewed interest in strengthening consumer protections in the state law that regulates prepaid home heating fuel contracts.
State Rep. James Webb, R-Derry, said he is reviving a bill that would require companies to secure 75 percent of customers’ prepaid deposits in either an escrow account, maintaining a letter of credit or surety bond with the state Attorney General’s office as beneficiary.
Webb said House Bill 566, first proposed in 2009, was set to be killed in the House. But it will now go before Webb’s fellow representatives for debate in approximately two weeks.
Webb said he pulled the bill from the consent calendar, saving it from certain legislative death, to draw attention to the plight of Fred Fuller Oil customers.
“It doesn’t mean it’s going to pass, but at least there is going to be more of an awareness if people realize that the biggest oil distributor in New Hampshire is having problems right now,” Webb said. “And I don’t know how many millions of dollars’ worth the pre-buys are.”
Current law (RSA 339:79) requires the dealer, within seven days of entering into a prepaid contract, to commit to a futures contract to buy fuel at a fixed price at a certain date, but this provides no legal protection for consumers, Senior Assistant Attorney General James T. Boffetti said Thursday.
“Don’t confuse getting a futures contract with doing something to safeguard the money,” warned Boffetti, who heads the state Attorney General’s Consumer Protection and Anti-Trust Division.
“The problem with the futures contract is it doesn’t secure any money. It simply is a promise by an oil dealer to buy the oil at a future date. It doesn’t protect that money. They can use that money and use it for current operating expenses,” Boffetti said.
Oil Heat Council of New Hampshire Executive Director Robert Sculley said most home heating oil delivery companies are “good, smart, business people who take care of their customers” and have had no issues with the plans they offer.
“I would not say that doing business with the vast majority of people, if they offer pre-buy, is risky business. Unfortunately, there are examples of pre-buys that have gone bad, and that’s why you have legislation.”
Boffetti said House Bill 566 would help avoid situations like those that occurred in 2012 when customers of Flynn Oil in Exeter lost more than $500,000 on prepaid heating oil contracts after the company collapsed.
Boffetti noted the vast majority of Fuller customers who are not getting oil deliveries do not have prepaid contracts.
He said company owner Fred Fuller “sort of volunteered” to suspend prepaid contracts for the 2014-2015 heating season after Boffetti and Attorney General Joseph Foster expressed their concerns to him during meetings this week.
“He indicated that he would put some sort of moratorium on those contracts until this crisis abated,” Boffetti said.
Longtime Fuller Oil customer Dan Niemeyer of Londonderry already received his prepaid contract in the mail last week.
“I’m going to think twice about doing another pre-buy next year. It just doesn’t feel right,” Niemeyer, 57, explained. Niemeyer has been a Fuller Oil customer for more than 20 years and has had prepaid contracts with the company for the last eight to 10 years.
Niemeyer, who is on the company’s automatic delivery plan, ran out of oil Dec. 19. He went to Fuller’s Derry office after he couldn’t reach the Hudson or Derry offices by telephone. He got a delivery that day. He said he was later able to contact the company by telephone using a direct number the clerk gave him.
“I’m willing to forgive them for once. Stuff happens. But if you put all the other pieces of the story together, I don’t like the way the picture looks,” he said.
Union Leader Correspondent Hunter McGee contributed to this report.