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The Old Utility Scam

April 1, 2019

By Jim Rhodes

The phone rang in our office last week. The caller ID showed that it was from Dominion Energy, our electric utility. Our business manager picked it up. She listened to a recorded message stating that our company’s electric account was in arrears and our service was being disconnected. The message instructed her to call a toll-free 1-800 number and ask for a specific extension number.

Naturally, her first reaction was to check our records, which showed we were fully paid up, and she checked our bank account to make sure our utility checks had cleared.

Thus fortified, she called the number.

The line was answered by a typical utility recording (“Thank you for calling Dominion Energy”) giving the usual list of extension numbers (‘To set up a new account press 1. To report a change of address, press 2. To report an outage, press 3.” etc.).

She entered the extension number she had been given. It was picked up by a man who identified himself as the collection supervisor for Dominion. He told her that our electricity service had been ordered to be shut off within the hour. She tried to argue our case and explained that our records showed we were paid in full, but he insisted on an immediate cash payment. He instructed her to send $200 immediately either with a prepaid debit card or a money transfer like MoneyPak. “You can buy one at most convenience and grocery stores,” he said. “But do it quickly. The truck is on its way now.”

He told her that if our power was switched off it might take days or even weeks to get it restored.  Obviously, this would be disastrous for our business.

Then he hung up on her.

She came into my office and told me about the call. “We can’t afford to be shut down for a week or more without electricity,” she said.

“Did he ever tell you how much we owed?”

She shook her head.

“Smells fishy to me,” I said.

So, we called the customer service number printed on our electric bill and spoke to a real representative of the company, who explained that we were just the latest near-victims of what is becoming a favorite ploy of professional scammers.

We also reported it to our local police department and the crime/fraud line at our local daily newspaper.

A happy ending for us, but not for the thousands of people who have been intimidated by these crooks into paying up.

My interest piqued, I did a little research into the subject. To my surprise I learned that the utility scam has been around for quite a few years with variations. In recent years the perpetrators have become more sophisticated, using caller-ID spoofing software to bypass spam filters and creating a phone answering service that sounds authentic.  It’s worldwide and far more prevalent that I would have imagined.

The National Consumers League reports that small business owners are frequently targeted by utility scammers, since many of them do not have a full-time bookkeeper or office manager, and the person taking the call may not have access to the financial records.  And the scammer is insistent: “The truck is on its way to your address, but I can call them off if you pay right now.”

I googled around and read dozens of reports from victims, a surprising number of which admitted to paying up. Usually the amounts demanded are relatively small, averaging $500 or less. But the owner of a car dealership in Alabama paid $2,000. It was a busy Saturday with customers in the showroom, and his bookkeeper was off for the weekend. He said he couldn’t afford to take a chance on having the business shut down.

Duke Energy, a North Carolina utility, has logged more than 25,000 incidents of the utility scam since it started tracking reports in 2015. About six percent paid, representing a total loss of about $1.5 million.

Nationally, the statistics run into the tens of thousands annually with total losses in the millions. There’s even a website in Australia on similar scams in that enlightened country.

The utilities are fighting back. More than 100 of them have joined a consortium called Utilities United Against Scams (UUAS) to educate consumers. The organization held their third annual “Utility Scam Awareness Day” November 14.

I applaud the utilities for their awareness campaign, but they need to up their game. I think I’m a pretty savvy and well-informed consumer but was blissfully unaware of this scam until it hit close to home.

Now I’m educated.

I hope you are too.