An Island gas company drew some darts this week for asking a number of its customers who have had credit problems to pay a deposit this winter or face being shut off from future deliveries of gas and propane.
A letter sent by Vineyard Propane & Oil in recent weeks to certain customers states that the company had performed a credit check which revealed their credit history was insufficient for billing, and that the customer would need to pay a deposit of $300 to insure future deliveries.
If the deposit is not received by Jan. 1, the letter states, the company would shut off further deliveries.
Vineyard Propane defends the credit checks and deposits as standard business practice, and a spokesman for the Massachusetts Attorney General said the practice is legal.
Although the letter was sent to customers across the Island, many went to residents of Morgan Woods, the large affordable housing development in Edgartown which opened in June.
The letter caused some concern among the people who received it. Some contacted town officials to inquire whether the company had the authority to perform credit checks or to charge a deposit for customers with bad credit.
One elderly woman who received the letter contacted the Oak Bluffs Council on Aging to report she did have the money to pay a deposit, but questioned whether she should have to comply.
Council director Roger Wey contacted Cape and Islands Rep. Eric T. Turkington after receiving several complaints from seniors about the letter. Mr. Wey said he has never heard of a utility company charging a deposit before deliveries are made, and he questioned whether it was appropriate, especially for elderly people on a fixed income.
“These people have hard enough time making ends meet,” Mr. Wey said on Tuesday. “Some of them just don’t have money for a deposit.”
He said the council has had a good relationship with Vineyard Propane in the past, adding that the company has worked with seniors having a hard time paying their bills.
“They’ve always been helpful, so I don’t think anyone did anything wrong here,” he said. “I just think it might have been an oversight. I have to question whether they should be asking a senior citizen to come up with $300 just before Christmas.”
Reached by telephone on Tuesday, Mr. Turkington said he shared Mr. Wey’s concerns and had sent a letter to attorney general Martha Coakley questioning the legality of a gas and oil company performing a credit check and demanding a deposit.
Mr. Turkington said he would reserve judgment on the practice until he heard back from the attorney general, but he said asking for a deposit from certain customers seemed unusual.
“I’m not sure if that is a common practice — $300 is a lot of money to some people,” he said.
Amie Breton, deputy press secretary for the attorney general’s office, said she had received the letter and determined there were no violations or bad business practices on the part of Vineyard Propane. She said any company that advances credit to a customer is allowed to perform a credit check under both state and federal law, and also is allowed to charge a deposit.
Ms. Breton said the attorney general’s office had not received any complaints about Vineyard Propane this year.
Jessica Burgoyne, site manager for Morgan Woods, said she had heard from some residents of the development with concerns about the letter and request for a deposit. But many of the same people later reported that they had talked to the company and found an amicable solution.
Ms. Burgoyne said she had called Vineyard Propane herself and the people there were very friendly and helpful.
“It seems they genuinely want to do the right thing and are willing to work with people,” she said.
Cliff Karako, general manager of Vineyard Propane, said he was surprised at the backlash. He said the letter grew out of an existing policy requiring all new customers to go through a credit check, which was the case with residents of Morgan Woods.
Mr. Karako said Morgan Woods is a unique situation because the homes are part of a complex of buildings connected to propane lines that are charged for metered service, as opposed to single-family homes that have individual tanks that are filled and then billed intermittently throughout the year.
Mr. Karako said credit checks and deposits are nothing new for the company. If a customer living in a single-family home has bad credit, the company will ask for a deposit first, and may ask for cash on delivery of propane or oil. He said the policy of charging a deposit is sanctioned by Vineyard Propane’s parent company, Heritage Fuel.
He said the company is willing to work with customers on an individual basis who have problems coming up with the deposit.
“We aren’t going to leave them in the cold; we’re going to find some type of solution,” he said. “But in terms of performing a credit check and asking for a deposit, that is a very standard practice for any company who is going to extend some type of credit to someone, from phone companies to gas companies to credit card companies.”
Mr. Karako said he was disappointed someone would contact their state representative without calling him first.
“I guess the inference is that we are targeting certain groups of people, and that is simply not the case, this is standard business practice,” he said. “And it bothers me anyone would take these concerns and call [their state representative] without calling me and talking to me personally. We go out of our way to help people out whenever we can, and we will continue to do so. I just hope people understand the reality of the situation before they jump to conclusions.”