Energy Broker Scams: How Businesses Are Trapped in Unfair Contracts

The Hidden Dangers of Bad Energy Broker Practices & Verbal Contracts

The energy brokerage sector has, for years, been plagued by rogue brokers whose primary goal is to secure quick commissions at the expense of businesses. These so-called ‘cowboy’ brokers often use misleading tactics to sign clients into contracts that are not in their best interests. One of the most concerning tactics is the use of verbal contracts, where conversations are manipulated to falsely bind businesses into long-term agreements.

The Risks of Verbal Contracts & Misrepresentation

One of the most common complaints against bad brokers is the manipulation of verbal confirmations. Many businesses have reported brokers falsely editing call recordings, snipping parts of conversations where a client says ‘yes’ and inserting it into an entirely different agreement to make it seem as though they consented to a contract. Once this is done, the broker claims the business is legally bound to an energy contract they never truly agreed to.

BES Utilities (now rebranded as Ruby Energy) is an example of a company that was fined by Ofgem for malpractice related to mis-sold contracts. However, they are far from the only company to use these tactics. In fact, the former owner of BES Utilities was jailed for fraud, revealing deeper issues within the industry. You can read more about this in our blog: BES Utilities Owner Jailed for Fraud – The Dark Secrets of BES Utilities Exposed.

A recent discussion on a Facebook forum highlighted how some businesses have reported issues with certain brokers, particularly concerns about unexpected contract renewals and difficulties in leaving contracts. Several users shared experiences where they claimed they never received renewal notices, only to find themselves tied into expensive, long-term contracts. These concerns have led to increased frustration for business owners struggling with rising costs.

The Issue with Letters of Authority (LOAs)

Another key concern is the use of Letters of Authority (LOAs). While an LOA is meant to allow a broker to manage energy procurement on a client’s behalf, some brokers abuse this power by inserting terms that allow them to renew contracts without the client’s knowledge. This means businesses may find themselves locked into expensive, unfavourable deals without ever reviewing their options.

Some brokers have faced criticism from businesses who were automatically renewed into contracts without their consent, simply because they had signed an LOA years prior. Many business owners only discover the issue when it is too late, as energy suppliers refuse to cancel contracts initiated through a broker.

How to Protect Your Business from Bad Brokers

To ensure your business is protected from these unethical practices, follow these key steps:

1. Never Agree to a Verbal Contract – If an energy broker insists that verbal agreements are legally binding, walk away. Always request a written contract and review it thoroughly before signing.
   
   
2. Only Sign Contracts via Secure Platforms – Platforms like DocuSign and HelloSign provide a digital trail that cannot be tampered with. These platforms track the IP address, timestamp, and signing details, ensuring transparency and security.
   
   
3. Request Full Terms & Conditions – Before agreeing to any contract, make sure you receive a full copy of the terms and conditions. A trustworthy broker will always provide these upfront.
   
   
4. Check LOA Terms Carefully – If a broker asks you to sign an LOA, read the fine print carefully. Ensure that it does not allow automatic renewals or authorise the broker to act on your behalf beyond what is necessary. If it does, you are within your right to ask them to change it to only give them access to what you feel comfortable with.
   
   
5. Research the Broker’s Reputation – Before working with any broker, check their reviews on platforms like Trustpilot and online forums. If there are multiple complaints of businesses being signed up without consent, take that as a red flag.

Why Choose Smart Energy Company?

At Smart Energy Company, we operate with transparency and integrity. Unlike many brokers in the industry, we only use DocuSign for contract agreements, ensuring that every client receives a secure, verifiable copy of their signed contract.

Additionally, we never engage in auto-renewals or misleading LOAs. Instead, we work closely with our clients to review their energy needs and secure the best deal based on live market conditions. Our commitment to honesty and client-first service is reflected in our 100% 5-star reviews on Trustpilot.

Final Thoughts

Bad broker practices have harmed countless businesses, locking them into contracts they never agreed to or automatically renewing them into overpriced deals. The best way to protect your business is to be vigilant, demand written agreements, and work with reputable brokers who prioritise your interests over commissions.

If you’re looking for a trusted, transparent, and client-focused energy broker, get in touch with us today for a free energy review. Don’t let bad brokers take advantage of your business—work with a team you can trust.

Disclaimer: This article is based on publicly available reports and customer experiences. Businesses should conduct their own due diligence before entering into energy contracts.