NEWS RELEASE

FOR IMMEDIATE RELEASE

Contact: Todd Hallidy

Phone: (302) 577-8314

Date: June 28, 2001

A.G. BRADY RESOLVES FRAUD CHARGES WITH CONECTIV

Consumers to Receive Full Restitution for False Advertising

(Wilmington, DE) - Attorney General M. Jane Brady today announced that consumer fraud charges have been resolved with Conectiv Services, Inc., and Conectiv, Inc., ending a two year false advertising investigation involving a direct-mail sales promotion offering "free" heaters to consumers in New Castle County.

In 1998, approximately 30,000 homes in New Castle County received a direct-mail piece from Conectiv, promising consumers a "free" heater with the purchase and installation of a heating-air conditioning system. Subsequently, a former Conectiv Services employee informed the Attorney General's Consumer Protection Unit that Conectiv inflated labor charges for the promotion above their standard rates. This rate increase was deliberately intended to offset the costs of the "free" heaters consumers were supposed to receive with their systems. Investigators reviewed hundreds of documents, including dozens of consumer contracts, and confirmed that consumers were essentially paying for their heaters through Conectiv's inflated labor charges, and not receiving "free" heaters as advertised. In all, investigators learned that 52 customers had accepted the offer, and were completely unaware they were overcharged for labor by Conectiv. Under the settlement announced today, all 52 consumers will be fully reimbursed for the overcharge and Conectiv will pay a separate penalty for its 30,000 separate acts of false advertising.

"Our society depends on truth in advertising and every consumer has an absolute right to expect it," said Attorney General Brady. "Calling something 'free' while actually charging money for it is not an acceptable business practice in Delaware."

Conectiv, Inc., and Conectiv Services, Inc., (a wholly owned subsidiary of Conectiv, Inc.), will pay $25,000 in full restitution to the 52 consumers who were misled, an average of approximately $500 per customer. Conectiv will also pay $125,000 in penalties, investigative costs and attorney fees to the State of Delaware and will be subject to a Cease and Desist Court Order, prohibiting such unlawful conduct in the future.

The Consumer Protection Unit will begin contacting all affected consumers about their pending restitution payment this week.

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