Consumerist Undercover At IDT Energy: Let's Get Juiced

I staggered into Midtown Promotions at 10am on Wednesday. Seeing as how people were only trickling in for the morning meeting, the receptionist and another office assistant gave me some papers to fill out and sign. (Note: all spelling errors/typos are as they appeared…)

This is part 4 of our undercover report into IDT-Energy, an energy reseller in the New York area…


1. An “Authorization to Obtain Consumer Credit Report,” in which I agree that Midtown gets to take $14 out of my first paycheck to reimburse themselves for running background check into my “general reputation… or mode of living.” Not sure why this was necessary as we’re not working for them on a full-time salary.Click to enlarge images.

2. An independent contractor agreement that states I will not be reimbursed for fuel, transportation, or any other expenses, am, “not acting and other capacity for us. We will not deduct or pay income tax, unemployment insurance, government plan, employer health tax or similar amounts. YOUR RELATIONSHIP WITH MIDTOWN PROMOTIONS, DOES NOT QUALIFY YOU FOR MINIMUM WAGE, WORKERS COMPENSATION OR UNEMPLYOMENT.”3. A “Covenant Not to Compete,” stipulating that I can’t call the customers myself or work for a competitor. I’m also not allowed to solicit any employees to quit.This also asks me to recognize that breaching this contract will, “cause irreparable harm to [Midtown] and that damages alone would not be adequate remedy.” I shudder to think. “Therefore the Independent Contractor of part 5 shall be entitle to an injunction restraining to Independent Contractor for the commission of such breach.” Correct us if we’re wrong, but we’re pretty sure spelling errors invalidate the clauses they’re found in. That is, if they spell injunction as “incunction,” they never obtain an injunction.

4. “Complice with the Law”
“You must comply with all federal, state, and local laws and licensing requirements.” “You will not represent yourself in any way as being an employee or contractor representing the perspective client with whom you are soliciting for.” The rest of the page contained similar language forbidding fraud and/or forgery.I also filled out a W-9 and was given a commission schedule to sign. Note under OVERRIDE SCHEDULE – LEADER. Leaders get paid 25 cents for every application by sales grunts working under them that leads to a paying customer. Assistant Managers got 50 cents. This type of commission structure suggest that Midtown Promotions is a multi-level-marketing (MLM) company. Typically, most people at the bottom level of a MLM scheme lose money.After I completed the paperwork, Eric asked a sheepish James to walk me down the Hallway of Motivation, as I dubbed it. It’s lined with posters with inspirational messages, like a quote from a historical figure, another from “The Seven Habits of Highly Effective People,” and the rest from who knows, fortune cookies and popsicle sticks. I tuned most of it out.

We were supposed to arrive at the meeting at 10, but nothing got underway until 10:30. Listening to my tape recorder, the room was a jumble of incoherent conversation, which I found even more indecipherable in person.

We all stood around in a circle of, what I counted as twenty-eight people. Chalkboards sat on opposite walls. Then a guy in an expensive suit came in and walked straight to the far chalkboard, causing the circle to expand.

“Hey guys!” shouted Jameson.
“HEY, WHAT?”
“Now, that’s what I like to hear in the morning. How’s everybody doin’ this morning?!”
“GOOD,” they shouted, in unison, in harmony, like soldiers. I felt like the one kid in class mouthing the words to “under God” in the pledge of Allegiance.

Jameson was there to go over what Midtown considers the most important part of the process: the Five Steps, a sales-closing concept that was word-for-word the same as what ex-DS-MAX employees referred to online, and in an interview with The Consumerist. They went like this: 1) Introduction 2) Short Story 3) Presentation 4) Close 5) Rehash.

While discussing the first few steps, I caught Jameson saying this about the customer’s cancellation rights:

“Basically you’re making sure that they know that you’re not from Con Edison, that you’re from IDT-Energy. That’s one of the main things to make sure that we’re doing, >misleading the customers.”

Perhaps a Freudian slip?

Johnny continued, “All right? 90 percent of the complaints are when they think we’re from Con Edison. Wear the nametags out in the open and tell them numerous Times that we’re from IDT-Energy. People hear what they wanna hear— people think when you say, ‘Find us that bill’ that you’re from Con Edison.”

Then the meeting broke up with a cry of “Juice!” People milled around. David, one of the top salesman, a young guy sporting a pencil-thin goatee and with a Bluetooth earphone glued to his ear, overheard James saying I’d “done well” on my first day. David looked at me, nodded, and said, “Juice by you.”

I asked Carl what David meant.

“Juice is, like… that’s where it’s at.” Seeing my blank stare, he elaborated, “It’s a compliment. It’s like, that’s good news.”

* * *


“Hi, my name is Carl, and this is Brian. We’re with IDT-Energy. We’re the supplier for Con Edison and Keyspan. And we’re in your neighborhood today to make sure that you and your neighbors are getting the discount on your gas & electric bill. If you bring me a copy of your bill, I can find out if you qualify for the program.”

Hardly a silver-tongued pitch, but it seemed to work five out of ten times. When it failed, it was mainly because the customer didn’t speak enough English.

I practiced the pitch all day with Carl, finally taking on my own doors around 3:30. That I stopped asking questions seemed to give him more confidence in my abilities. Actually, it was because I realized he couldn’t, or wouldn’t, help me get any closer to verifying The Consumerist reader’s complaints about fake ConEd salesmen.

I stepped into an Allstate Insurance office in East Elmhurst around four pm, trying to get an appointment with the owner. Business contracts are worth more commission. The owner was “in a meeting… till the end of the day.” The other employees stood up and then sat right back down, keeping an eyeball on us. They can smell we’re shysters, I wanted to mutter to Carl, they recognize their own scent.

Leaving there, I saw a woman in the second-floor apartment looking out at us through a part in the curtains. She appeared to be wearing only a bra. “Don’t look now,” I said, “But we have our first admirer of the day.”

Carl turned to see the curtain swiftly close “Want to go knock?” he asked with a chuckle.

“Hell yeah,” I said, glad for any opportunity to crack the monotony.

We entered her building through the open doors. We made our way to her second floor door, which was also open. The woman from the window was practically waiting in the doorway when we rang. She had a thick and disproportionate face, too long and large for her body, and voluminous breasts falling out of her thin white nightgown.

“Oh no, I don’t pay my bill, the landlord sees to that,” she purred through a wry smile

I felt Carl’s grin at my back. I decided to end the pitch and get out of there. She didn’t close the door until we were long gone, looking after us. Heading up the street, we saw a hand holding her upstairs curtain open.

Not long after that, I made my first sale, to a single mom I could not help but ask if she was eighteen. “Eighteen?! I’m twenty-eight!” The poor dear, I hope they lose your paperwork.

From there, I became increasingly uncomfortable with the prospect of actually making any sales. What if I ruin their lives by jacking up their energy bills?

I never a saw a single person flip over the contract and read the fine print in the terms and conditions. If they did, they might have noticed this part:Under “Rates” it says that IDT-Energy guarantees a price 7% lower than ConEd’s for the first two months, but after that your price goes to a variable rate. So for the first two months customers think they’re getting great savings, and then you start paying based on whatever best deal IDT finagles on the wholesale energy market.

Carl made sure all our customers initialed every point on the “Customer Acknowledgment of Agreement and Notice of Cancellation Rights,” but I wondered whether all Midtown Promotion’s reps were so diligent. Or if the non-English speakers really understood the form they were signing.

I had to keep telling myself that they were free to make their own decisions. But sometimes things are not that clear-cut. Maybe they were confused and thought, due to their poor English, that I was from ConEd, that ConEd was reducing their bill. That we were answering their prayers.

It was very difficult, at the end of the day, to morally justify what I was doing. I wondered whether going undercover was doing more harm than good. Could I justify possibly screwing one person, just to help others from getting screwed? — BRIAN FAIRBANKS

TABLE OF CONTENTS

1. Day One
2. The Job Interview
3. The Day Of O
4. Let’s Get Juiced
5. The Meeting
6. The Meltdown
7. The Confession

Note: No definitive ties have been established between Midtown Promotions and DS-MAX/Innovage.

Comments

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  1. rmz says:

    [good place to insert image]

    Missed one, Brian!

    ;)

  2. SarahHeartburn says:

    If your conscience is really bothering you about the people you signed up, go back when you’re finished with this report and tell the people to get in touch with the Attorney General’s office or whatever public entity could help them out.
    The general rule in any profession, to borrow from the docs, is, first, do no harm.

  3. minneapolisite says:

    Note: you forgot to remove the [good place to insert image] text.

  4. jmuskratt says:

    Misspellings, unless they happen to spell other contextually relevant words, do not invalidate a contract. Good thing, because lawyers are horrible spellers.

  5. chimmike says:

    if he’s acting as an independent contractor, they have no business collecting a w9 from him, nor his credit report, as they openly admitted he’s not directly employed by the company (hence they get out of paying minimum wage and federal taxes on employees) So techincally, he has no reason to go to that office every morning, he could essentially go do his job and report at the end of the day or something.

    Very interesting how they check the credit. Kinda strange too.

    Oh well. good luck to you man. Hope you can get out of there quick.

    Also, I hope the FTC and NY State offices are reading this.

  6. rachmanut says:

    “Juice by you?” Did these people only watch the first third of Requiem for a Dream when making their motivational screed or is this common in the adrenaline-enhancing business?

    Also, how do you manage to spell the Independent contractor agreement” correctly on one page and incorrectly on the next? No cut and paste? Shysters.

  7. chimmike says:

    Also, I forgot to mention, if he’s acting as an independent contractor, he’s under no legal obligation to sign a non-compete agreement as well as a non-solicit to quit agreement.

    He could refuse to sign those. If they refused to employ him based on that, he could sue ‘em for it.

  8. acambras says:

    IANAL, but it seems that one of the big differences between employees and independent contractors is how closely they’re supervised.

    Take, for example, someone who cleans at an office building. An employee would use employer-provided equipment and supplies, would have set work hours, and would be supervised fairly closely. An independent contractor, on the other hand, would provide his/her own equipment/supplies and would work independently (in terms of hours and supervision).

    It sounds like this outfit wants to micromanage Brian like an employee, but reap the financial benefits of having him be an independent contractor.

  9. axiomatic says:

    Are you sure you haven’t joined a cult? When they sacrifice a goat for “juice”, please blog it.

  10. megnificent says:

    It is just me, or does the commission schedule actually say that the Assistant Manager gets $.50 for every 1/2 app? Wouldn’t that translate to $1.00 for every application? Why wouldn’t they just type it that way?

    Oh wait, I know. They don’t want the schmuck out pounding the pavement to know how much the suit back in the air-conditioned office is actually making off of his hard work.

  11. firestarsolo says:

    You guys need to recall that this is all over now…all of the stuff you’re reading already happened, and I believe he’s just posting it daily despite it being complete.

  12. Wormfather says:

    Um guys, I’m willing to bet $13.95 that they never checked his credit report (go have a look at it). That’s just a way to keep a few bucks away from everyone.

  13. Hawkins says:

    I am not a tax attorney, but there’s no possible way that our hero could be legally called an independent contractor.

    The IRS cares a great deal about this. See http://www.irs.gov/businesses/small/article/0,,id=99921,00…

    In summary: because the employer controls the means and methods of doing the work, Mr. Fairbanks canot be treated as an independent contractor.

    Midtown Promotions is probably liable for federal employment taxes for all of these poor saps.

    Mr. Fairbanks can get the IRS to make a specific determination in his case by submitting form FSS8, available here: http://www.irs.gov/pub/irs-pdf/fss8.pdf

    With luck, this will lead to an IRS investigation.

  14. ChrisC1234 says:

    Did anyone else notice the phrase “All commissions are held for 120 days from the last date of submitted applications” on the commission schedule? That wording sounds to me like they will hold your last check for FOUR MONTHS after you quit (or stop providing them with completed applications). I’d be willing to bet that some of the employees are stuck with them because of this provision. I even wonder if they can legally do that. http://definitions.uslegal.com/l/last-paycheck/

  15. exkon says:

    God I loved these undercover articles. Keep them up!

  16. Jiminy Christmas says:

    @acambras:

    I was thinking the exact same thing. IANAL either, but those hired by Midtown Promotions certainly seem to fit the definition of an employee. They don’t set their own schedule, determine their own work methods, and it seems they report to a supervisor on a daily basis.

    I’m sure if someone had an axe to grind with Midtown, the IRS would find their business practices of interest. Likewise, the individuals who sign up with Midtown are courting disaster if they don’t keep their paperwork in order. I would be surprised if most of the people in Brian’s shoes were witholding 12% for Social Security and making estimated quarterly income tax payments as the self-employed are supposed to do.

  17. jwarner132 says:

    @Hawkins:

    I’m not a tax attorney either, but reading that IRS article you linked to, it looks like Midtown may be in the clear. Take a look at this section:

    ———

    Statutory Nonemployees
    There are two categories of statutory nonemployees: direct sellers and licensed real estate agents. They are treated as self-employed for all Federal tax purposes, including income and employment taxes, if:

    Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked and
    Their services are performed under a written contract providing that they will not be treated as employees for Federal tax purposes.

    ———

    In today’s episode, you can see that Midtown had Brian sign such a contract. Also, substantially all of Brian’s payments for his services as a direct seller were directly related to sales, rather than to the number of hours worked. So it looks like Brian indeed qualified as a statutory nonemployee, or independent contractor.

  18. RandomHookup says:

    @chimmike:

    Actually the wording of the form is a pretty standard boilerplate for any background check, not just a credit report. They can check criminal records, driving records, etc. Actually a pretty good business practice for a company that sends ‘contractors’ into people’s homes.

    And there’s nothing to stop a company from asking for a noncompete/nonsolitication for their contractors. It happens all the time. I have had to stop hiring from my auditor because there was a nonsolicitation clause in the contract that I had nothing to do with.

    Of course, there is no way in hell these guys are independent contractors. I smell a class action lawsuit.

  19. sebastian_dangerfield says:

    “Basically you’re making sure that they know that you’re not from Con Edison, that you’re from IDT Energy. That’s one of the main things to make sure that we’re doing, misleading the customers.”

    Is that the direct, actual quote, or should there be a “not” in that last sentence?

  20. Hawkins says:

    @jwarner132: Oh. Rats.

  21. Eukaryote says:

    “You will not represent yourself in any way as being an employee or contractor representing the perspective client with whom you are soliciting for.”

    Wait, what? You can’t say that you’re an employee or contractor for the person you’re trying to sell to?

    with whom you are soliciting for

    I’m not even going to touch that.

    This whole thing looks like it was written by a guy who read the rules for a sweepstakes entry on a cereal box and then said “Oh, I can do that!”

  22. Eukaryote says:

    To piggyback on my earlier comment: First, I assume that the guy said “…make sure that we’re [not] misleading our customers.”

    “Basically you’re making sure that they know that you’re not from Con Edison, that you’re from IDT Energy. That’s one of the main things to make sure that we’re doing, misleading the customers. All right?”

    If you were to interpret the language from the contract exactly how I assume they want you to, then you are supposed to do the exact opposite! That is, you can’t let me them know you work for IDT.

    This is shady. I’m excited to hear what comes next!

  23. SarahHeartburn says:

    I’d also like to add that, considering the type of sleazebags running this scam, that you should consider the possibility that you could in the future be a victim of identity theft. They have all your basic informatin and know something about your background. I wouldn’t put it past them to use your data for other sleazy purposes.

  24. Ben Popken says:

    @sebastian_dangerfield: That’s a direct quote.

  25. Sudonum says:

    @chimmike:
    A W-9 is exactly the form that he would fill out as an independent contractor. This provides your SSN to the company “contracting” you so that they can issue a 1099 for any money they pay to you that tax year. Even if you are incorporated and have a TIN you have to fill out the W-9.

  26. Msgundam8444 says:

    According to the fine print on the contract, you have three days to cancel. If guilt is weighing heavily on your mind about screwing people over, see if you can contact the people you signed up and get them to cancel…

    Also, I hope that the attorney general is reading this. Isn’t using a minor to facilate a contract (translate) illegal? Also, isn’t it illegal to have people sign forms under false pretense especially if they are not fluent in the language of the contract (English)? If a random person in uniform asks for your energy bill and asks you to sign a form, I bet tons of old ladies and people with poor english skills would sign the form out of fear. They wouldn’t care or even understand that they are ‘saving’ money. This has got to be illegal.

    Anyway to send this site or at least this story in link to the attorney general? Then again, that would be up to the editors of the site and/or Brian.

  27. ptkdude says:

    “Juice by you” would cause me to want to respond “and also by you.”

  28. Msgundam84 says:

    According to the fine print on the contract, you have three days to cancel. If guilt is weighing heavily on your mind about screwing people over, see if you can contact the people you signed up and get them to cancel…

    Also, I hope that the attorney general is reading this. Isn’t using a minor to facilate a contract (translate) illegal? Also, isn’t it illegal to have people sign forms under false pretense especially if they are not fluent in the language of the contract (English)? If a random person in uniform asks for your energy bill and asks you to sign a form, I bet tons of old ladies and people with poor english skills would sign the form out of fear. They wouldn’t care or even understand that they are ‘saving’ money. This has got to be illegal.

    Anyway to send this site or at least this story in link to the attorney general? Then again, that would be up to the editors of the site and/or Brian.

  29. Perspex says:

    Maybe my browser is borked (or bjorked!), but each place that the word “times,” that’s T-I-M-E-S, should appear it is actually replaced by “Erices.”

    WTF?

  30. Scazza says:

    @Perspex: Same here, I was reading, and I was like “what the fuck is an Erices?? Did I miss something from the day before?”

  31. Lighthill says:

    Oh dear. I see the search-and-replace error now.

    Imagine that you’re writing about a con artist named Bob. Imagine that once you’re done writing, you do a search-and-replace to replace every instance of “Bob” with an innocuous name like “Arthur.” Imagine that your article is now full of “Arthursledding”, “ThinumaArthurs”, “Arthurcats” and “Shish keArthurs”.

    Do you get what happened now?

  32. @ptkdude: Maybe he should try this, see how it goes.

  33. JuliusJefferson says:

    “Juice by you”???

    Sounds likes a bad episode of The Office.

  34. I will never open the door for anyone ever again. This is totally creeping me out.

    Someone should make sure to forward this series to Andy Cuomo’s office. I know people have said that before, but it definitely bears repeating.

    Wow. I wait with baited breath for the next installation.

  35. BII says:

    @ChrisC1234:

    Actually, I’ve seen phrasing like that in other commission-based jobs. Basically, let’s say you’re planning on leaving, so you write up a bunch of bogus orders, quit, take your commission check, then those bogus orders suddenly get canceled. This protects employers, although, to be honest, I’ve rarely seen any employer decide to hold commission for 90 or 120 days.

  36. DearEditor says:

    The “juice” mantra is international, and has been in use for a few years, at least. Some chums of mine (here in Nova Scotia) stepped in to a door-to-door outfit with nearly the same script in the office, right down to the chants: “Juice, juice, juice by you!” Like Brian, they wrote about the experience. The sad thing about this scheme is that both the buyers and sellers are victims.

  37. rachmanut says:

    Apparently the erices have been fixed. But now note that every “Time” in the article is capitalized. It’s okay, we know Eric is really Tim. They’re still pretty darn anonymous to us.

  38. mattbrown says:

    Juice by Brian… Juice by Brian… Juice by Brian… GooooOOO BRIAN!!!!

    brian got juice brian got juice

  39. devilspie says:

    In researching independant contracting laws, I have found this it is hard to prove or disprove, but in my understanding of the DS Max companies they DO violate some clear cut “rules.” Atmosphere meetings are a clear violation if you are required to attend. Calling the job a “training program,” highly violates the laws. One of the key ideas in being an independant contractor is that you are not told how to do your job, you are just supposed to get it done. Technically, the companies may be able to strongly argue their position, but there are 3 different units in the Labor department that handle these matters and each of them could rule independantly. However, regardless of the outcome, the amount of money that would need to be paid by a company to fight a dispute would kill them…and if they chose just to pay fines…that would kill them as well. The stress of dealing with the IRS is there for a reason. This job takes advantage of the people these laws are trying to protect. These companies should stress over it…even if they do get away with it! These little companies are poor. IRS fines are tremendous. TAKE THEM DOWN, file the complaint and you have no more involvement in it. I don’t think that the company actually is ever told who files the complaint, although that I am not 100 percent sure of.

  40. SisterHavana says:

    I worked for a DS-Max company in the suburbs of Chicago many years ago. The company I worked for sold VIP advertising cards for restaurants and golf courses and things. Obviously not much has changed – maybe some of the clients. The descriptions of the meetings, the interviews, the day of O – they all sound very much like the things I experienced. The one big difference between this office and the office I worked for is that no one got a paycheck. We all got paid in cash at the end of the day. (If I remember correctly, they held back our commission for sales where the customer paid with a check until the check cleared.) Talk about shady! That’s still the only job I ever walked out on. (I didn’t even last three weeks!)