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The Guardian - AU
The Guardian - AU
Christopher Knaus and Lorena Allam

Second energy firm wrongly received money from welfare payments under Centrepay scheme

Composite of the Centrepay logo and utility bills
Services Australia says it is working with energy retailer Ergon to return overpayments made via the government-run Centrepay debit system Composite: Guardian Design

A second Australian energy company wrongly received money from the welfare payments of former customers, prompting fears that the issue identified at AGL could be widespread.

Guardian Australia revealed last week that $700,000 had been diverted via the government-run Centrepay debit system from the pockets of more than 500 welfare recipients to the energy giant AGL.

Court documents showed the Centrepay system, designed to give businesses early access to a person’s welfare money, continued to funnel payments to AGL for years after individuals ceased being AGL customers.

In one case $6,800 was wrongly diverted from a welfare recipient’s payments in 74 separate deductions up to 11 December 2020. The welfare recipient had ceased being an AGL customer more than two years earlier.

Services Australia has now confirmed it is working with a second energy retailer, Queensland’s Ergon Energy Retail, to return overpayments made via Centrepay. It is unclear how much in overpayments was made to Ergon or over what period.

“The agency has supported the return of all overpayments to AGL customers,” said a spokesperson, Hank Jongen. “We have also commenced processes to support Ergon to return all funds to impacted customers.

“The agency supports the return of overpayments where businesses are unable to facilitate refunds themselves.”

Ergon Energy Retail confirmed it was in discussions with Services Australia about Centrepay deductions.

A spokesperson said Centrepay deductions could remain in place for final bills and for services that had previously been supplied after a customer had their supply disconnected.

The spokesperson said the company had robust processes for billing and to ensure any accounts in credit were refunded, and customers chose their methods of payment and set the amounts to be paid. The company noted Centrepay and other payment systems were managed externally to Ergon.

“If automatic payments are scheduled by the customer, they are unlikely to exactly match the billing amount, as electricity bills are highly variable depending on individual customer use,” the spokesperson said.

“If there is a credit on the account after an account has been closed, then Ergon Energy Retail will use best endeavours to return the excess CentrePay deduction to the customer or to Services Australia,” the spokesperson said.

“Ergon Energy Retail will first notify the customer via a message on their final bill that their account is in credit and request they make contact to organise a refund.

“After the issue of the final bill, Ergon Energy Retail will attempt to make contact as per its Services Australia agreement.”

A Guardian Australia investigation last week revealed deep problems with the Centrepay system, including its use to prop up a Christian rehabilitation centre using gay conversion practices and exorcisms and by rent-to-buy companies previously sanctioned by the corporate regulator.

Documents tendered in the federal court, where the Australian Energy Regulator is suing AGL, allege that the energy giant also knew it was continuing to receive money from former customers via Centrepay but did nothing for years. That allowed more than $700,000 in welfare payments to be wrongly diverted from recipients to AGL, the documents allege.

AGL denies it had control over the deductions, saying that was a matter for Services Australia, and is defending the case.

The company said it had not benefited from the diverted payments, which sat as credit in customers’ accounts and have now been refunded.

The Centrepay system is designed to give government-approved businesses early access to a person’s welfare payment, ensuring individuals can cover essentials such as rent, electricity and clothing. But customer advocates have warned for years that it is causing financial harm to welfare recipients.

The government says it is urgently pursuing reforms to the system, including to better prevent overpayments from occurring.

“It includes significant government, industry and customer consultation with a focus on safeguards and protections for customers to reduce financial harm, including Centrepay overpayments,” the spokesperson said.

A Services Australia spokesperson said Centrepay businesses are “made aware of their obligations to prevent overpayments from Centrepay customers” and that it investigates where any overpayments are identified.

But consumer advocates say both have a responsibility to ensure people do not overpay for services at all, particularly those on low incomes who are most likely experiencing financial hardship.

“If they’ve got one energy provider that they’ve left and they started with a new one, they’re actually double paying for energy, which means they’re sure to be in financial hardship,” the Mob Strong Debt Help financial counsellor and Boandik woman Bettina Cooper said.

“People on Centrelink are already on the lowest income possible. And to be in a situation because of either the business or Centrepay failings, then they are double paying for energy. We know it means they’ll have a greater reliability on emergency services and emergency relief. And they’ll certainly be in financial hardship and have trouble meeting other bills.

“We’ve seen this time and time again, not just with energy companies, but with consumer leases and other organisations. And it is time that Centrelink and Centrepay review and take steps to reform their systems and stop these overpayments and this harm to their most vulnerable customers.”

Cooper said it was not adequate for businesses and the government to assume all customers are able to access online accounts to cancel or change services, particularly those in remote communities.

“We know there’s a large level of digital exclusion amongst First Nations clients,” she said. “And we know that there’s a large number of First Nations clients signed up to Centrepay. So if the only way for a person to cancel it is via an online portal, then we’re not considering the needs of the customer. We need to provide an inclusive service.”

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