11/25/2014 09:57 EST | Updated 01/25/2015 05:59 EST

National Energy water-heater firm fined $7M for sales practices

A company that sells water heaters door to door has agreed to pay a $7-million fine for unfair and misleading sales tactics, including not letting homeowners know they are trying to sell them something.

National Energy Corporation has been the subject of thousands of complaints by regulatory bodies in Ontario and Quebec in recent years, including the Ontario Ministry of Government and Consumer Services, the Better Business Bureau and Quebec's Office de la protection duconsommateur.

Many of them surrounded allegations that the company's door-to-door sales staff were making false or misleading representations regarding their identity and the purpose of their visit to the customers’ homes.

As punishment, National will:

- Pay $1.5 million in restitution to all current customers obtained through door-to-door marketing since July 2008 in the form of a credit on their water heater rental bills.

- Pay a $5-million administrative penalty and an additional $500,000 towards the bureau’s investigative costs.

- Be forbidden from misleading consumers into believing their existing water heater is unsafe, or that it is eligible for a no-cost upgrade and requires the implementation of a corporate compliance program.

"Consumers rightfully deserve the truth when choosing service providers for essential goods, such as water heaters," said John Pecman, Canada's commissioner for competition. "The bureau is pleased that this agreement will protect consumers from being deceived by representatives of businesses who falsely identify themselves in order to make a profit."

Earlier this month, the Competition Bureau signed a similar deal with another water-heater company, Reliance Comfort Limited Partnership.

In addition to the fines and administrative costs, Reliance was required to take “certain steps to make it easier for customers to terminate their rental agreements and return their water heaters,” the bureau said.

The bureau is continuing to pursue similar actions against another company in the water-heater business — Direct Energy.