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Wed February 26, 2014
Heating Oil: Should You Pre-Buy?
The recent log jam in fuel delivery for some customers of Fred Fuller Oil Company has again led to calls for more regulation of what’s known as pre-buy contracts. Senior Assistant Attorney General and the head of the state’s Consumer Protections Bureau James Boffetti this month cautioned consumers that pre-buy agreements don’t provide adequate protection and said his office continues to advocate for changes in state regulations that would give customers better guarantees. The issue has been brought up several times in recent years following the failure of various oil dealers around the state, leaving hundreds of customers without oil they had paid for. We talked with Boffetti by phone recently and asked him if consumers have been hurt financially by pre-buy deals in the past.
Yes. That’s why there is a statute in place. It came about after the failure of Rumford Oil a number of years ago. Since then, there have been a number of other dealers that have failed. In 2009, Flynn’s Oil in Exeter failed. Consumers lost about $550,000 of pre-buy money because of that, and since Flynn, I know of two other companies that have failed.
Do consumers have any recourse?
Not a lot. They can go to bankruptcy court and ask to be listed as a creditor, but often by that time the company has no assets.
What does the state statute require?
The dealer has to secure that pre-buy money in one of three ways: a futures contract, which requires no money exchanging hands between the dealer and the supplier. 99.9 percent of these futures contracts are secured with these contracts. Our criticism of the statute is that the futures contract option provides inadequate consumer protections.
What would you like to see changed?
We’ve proposed… that the money be set aside in a dedicated escrow account… it’s a difficult issue… but we need to get to a different place then we are now, because we see these failures and losses to consumers. Consumers think that they will either get their oil, that it’s been bought and put aside, or they will get their money back. That has not been the case in many instances.