Energy comparison websites allow consumers to understand and compare energy providers’ offers. They sometimes also facilitate switching providers.
If you plan to start an energy comparison website, this article explains the key legal issues to consider in your relationships with consumers and energy providers.
Your Relationship With Consumers
Your terms and conditions should set out the terms of the service you provide. Below, we set out key topics that should be covered in this legal document.
1. Description of Services
Firstly, a clear description of services ensures that consumers understand exactly what you are offering, and what they can expect to receive.
Additionally, to avoid any future claims, your terms and conditions should make clear that the information you are providing is not advice. It is also best practice to clarify that you are not an energy provider.
2. Accuracy of Information
While you should aim to provide accurate and complete information on your website, it may be a good idea exclude any risk relating to the accuracy and completeness of the information to the extent permitted by law. This may be particularly relevant if you are only listing services provided by some (and not all) energy providers.
3. Quality of Energy Service Providers
You should plainly state that you are an introductory website only. You therefore do not:
- make any warranties or representations about the quality of the services provided by the energy businesses listed on your site;
- endorse any particular energy provider; or
- have any control over the energy providers and their delivery of services.
4. Generating Revenue
It is also important to be transparent about how you generate revenue from your site. Usually this occurs through referral fees from energy providers, not by receiving payment from the consumer for your online service.
- the personal information you collect;
- how you will use the personal information;
- when the personal information may be disclosed;
- how you store personal information;
- consumers’ rights in relation to privacy; and
- how to update incorrect personal information.
Your Relationship With Energy Providers
Comparison websites are a strong marketing tool as consumers can review energy businesses on the website and potentially switch to a new provider. Accordingly, energy providers usually pay a referral fee to comparison websites.
It is important that you clearly set out your relationship with the energy provider in a referral agreement. Below, we identify three key topics that should be covered in your agreement.
1. Referral Process
Comparison websites’ arrangements with energy providers may vary. Some comparison websites may simply provide consumers’ contact details to the energy providers. Others may facilitate the switch from one energy provider to another directly from the comparison website. Whatever arrangement your business chooses, set out the details of the referral process in your agreement. The energy provider should clearly understand how they will receive a referral.
2. Payment Terms
Describe your referral fee calculations in your agreement. For example, you may choose to use a fixed fee per customer, or calculate the fee as a percentage of revenue generated from that customer.
Your payment terms should also be specified. For example, you may choose payment to be made within seven days of a referral, or every month.
Clearly setting out when a referral fee is incurred, how it is calculated and when it must be paid may assist in avoiding disputes.
Referrals involve passing on personal information to an energy provider, so make sure you include confidentiality and privacy clauses in the referral agreement. This will ensure that consumers’ information remains confidential and that the energy providers comply with privacy laws.
Energy comparison websites act as an intermediary between energy providers and consumers. By having a clear set of terms and conditions which outline your obligations and liability, you limit the risk of consumer confusion and avoid future disputes. Additionally, your referral agreement with energy providers should include how and when you will receive commission, as well as reflect your privacy obligations to consumers.
If want help with drafting your website’s terms and conditions or a referral agreement, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.
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