NH Consumer Protection Bureau head urges caution on prebuy oil contractsStaff Report
February 09. 2014 7:08PM
CONCORD — The head of the state’s Consumer Protections Bureau is warning consumers about buying so-called “prebuy” contracts for home heating oil.
Assistant Attorney General James Boffetti said the contracts fail to provide consumers with protection and said the Attorney General’s Office continues to advocate for changes that would give customers better guarantees.
“The reason they provide inadequate security for consumers’ prebuy money is that these futures contracts are promises that the dealer may — emphasis on “may” — purchase oil at a fixed price at a future date,” Boffetti said in an email. “It is like a reservation of an oil purchase.”
Boffetti said there is no guarantee that the oil dealer will use the money consumers give them to buy reserves of oil to meet the contract.The issue is somewhat highlighted by the problems Fred Fuller Oil and Propane, the state’s largest oil dealer, had last month with delayed deliveries and hordes of customers complaining their tanks were empty or nearly empty.
The company said it had plenty of oil in reserves and that its issues were exacerbated by a companywide telephone outage, leading to customers unable to reach company employees.
“No money changes hands between a dealer and the supplier with a futures contract,” Boffetti said. “The dealer only pays the supplier of the oil when the dealer picks up the product. Consumers pay the dealer well in advance of the heating season.”
A dealer can take a customer’s money today and use it for other expenses, Boffetti said. “The dealer is not obligated under the statute to put aside that money in a dedicated bank account or to prepurchase the oil,” he said.