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Ambit Energy: Too Good to Be True?

CUB fields numerous inquiries about energy companies in Illinois, and we’ve heard recent concerns about Ambit Energy. If you’re considering signing up for Ambit as your energy supplier or working as a consultant for Ambit, make sure you understand the terms of your contract.

Ambit Energy is a company based in Dallas, Texas, but they have operations across the U.S. in states like Illinois that have deregulated energy markets. (Ambit Energy is owned by Vistra Corp., which owns several coal power plants in Illinois). In Illinois, gas and electric customers can choose a regulated supply rate through the utility or a deregulated supply rate from an alternative energy supplier. It is illegal for the utility to make a profit off what they charge for supply, but alternative suppliers can charge whatever they want. Since 2015, Illinois customers have lost over $1 billion to alternative retail electric suppliers, according to annual reports from the Illinois Commerce Commission.

Alternative suppliers like Ambit often advertise supply rates that sound competitive, but are variable, meaning they can increase over the contract term. A customer might sign up at a low rate, only to have that rate become unaffordable very quickly.

Ambit’s main business model is direct sales by “Independent Consultants,” which number over 600,000 nationwide, according to their website. As is the case with other organizations with this multi-level marketing model, consultants start a business with Ambit by paying an upfront “investment” (up to $500) and working to sign up their friends and neighbors for the Ambit supply rate.

Many customers across the U.S. have filed lawsuits against Ambit, alleging that the company misled them into thinking they would save, instead charging high rates. Investigations have also found that many who signed up to be Ambit consultants did not make what they were promised.

In December 2018, the New York Attorney General reached a settlement with Ambit, resulting in a $1.5 million penalty and a $20 million in refunds. Their investigation found that Ambit: “misrepresented that consumers would achieve savings, signed up consumers with Ambit without their consent, switched consumers to a more expensive energy plan without adequate notice, and promised its marketers high incomes that were not generally achieved.”

Here are some details on two of the class-action lawsuits that have been filed against Ambit:

  • Little v. Ambit Energy Holdings (New York, Maryland, and New Jersey): Two class action lawsuits were brought on behalf of Ambit customers in New York, Maryland, and New Jersey, alleging that the company overcharged customers on the Budget Billing Program for gas and electricity by failing to disclose Ambit’s actual energy supply rates and customers’ actual monthly energy usage.
  • Simmons et al. v. Ambit Energy Holdings, LLC et al. (New York): A class-action lawsuit was filed against Ambit, accusing the company of misleadingly offering customers a “1% Savings Guarantee,” when, in reality, the company overstates what other providers would have charged and does not honor its promise.
  • Silvis v. Ambit Northeast, LLC (Pennsylvania): This class action accused Ambit of deceptively inducing customers to switch their energy supplier to Ambit. Among other things, plaintiffs claim that the company promised that customers who switch to Ambit Energy will save money when, in reality, these customers may pay more.

According to one of the lawsuit complaints: “Defendants mislead consumers into believing that by switching to Ambit they will save money. Defendants attempt to lure customers with Free Energy, Referral Rewards and Travel Rewards programs. Further Defendants represent that their rates will be tied to market factors and their rates will be competitive with the market. Defendants exploit ambiguities in their representations and customer agreements to draw consumers in by creating the expectation of better than market prices that they will not realize.”

So if you’re considering Ambit, make sure you know the details of the contract, the price you’re being offered, how that price compares to the regulated rate (the “price-to-compare”) and how long that price lasts. You are not obligated to switch suppliers—you can choose to have the regulated utility company, ComEd or Ameren Illinois, serve as your supplier.   If you have a question or concern about your utility service, you can call the CUB hotline at 1-800-669-5556 (Monday-Friday, 9am-4pm).

If you have a complaint regarding an Alternative Retail Electric Supplier, you can file a complaint with the Illinois Commerce Commission here or at 1-800-524-0795.

If you have been subject to fraudulent or deceptive sales practices, the Illinois Attorney General’s Consumer Protection Division may be able to help, here or at 1-800-386-5438 (Chicago), 1-800-243-0618 (Springfield), 1-800-243-0607 (Carbondale), or 1-866-310-8398 (Spanish).