Attorney General Seeks Newtown Oil Refunds for Discover Card Holders

By Andrew Gorosko

Some holders of Discover credit cards, who lost money last winter after the Newtown Oil Company failed to honor their prepaid home heating fuel delivery contracts and went out of business, have had a more difficult time recovering refunds than holders of Visa and MasterCard credit cards.

State Attorney General Richard Blumenthal said October 23, “We’re hopeful we can help the 120, or so, people, who have been denied [Discover card] credit, which we believe that they deserve.”

Of the approximately 180 Discover card customers who lost money when Newtown Oil failed, only about 60 of those people got refunds from the Discover company, he said.

On contacting the Discover Financial Services firm, the state learned that some of its customers’ claims for refunds had been filed after its 30-day filing period, and thus were ineligible for refunds, the attorney general said.

Credit card company customers have protections against fraud, theft, and loss.

Mr Blumenthal said he hopes the Discover company can be convinced of the unusual circumstances of Newtown Oil’s demise, in which some of its customers did not become aware of the company’s failure until well after it had gone out of business.

Visa and MasterCard have agreed to relax their refund filing rules in light of the circumstances of the case, Mr Blumenthal said.

“For the Discover company, the amount of money is miniscule. For the individuals [affected], it’s major,” Mr Blumenthal said.

“We certainly hope that Discover will do the right thing,” he said.

Discover company officials could not be reached for comment, but reportedly are investigating the situation involving Newtown Oil.

For people who covered their Newtown Oil prepaid home heating fuel contracts with personal checks, the state is pursuing refunds for them in US Bankruptcy Court and in Connecticut Superior Court, Mr Blumenthal said.

The state will aggressively pursue recovering lost funds for Newtown Oil company customers, he stressed.

Newtown Oil has been the focus of a state investigation into the firm’s failure last winter to honor prepaid home heating fuel delivery contracts with approximately 1,400 customers, resulting in hundreds of thousands of dollars of customer losses. Newtown Oil failed to deliver approximately one million gallons of home heating fuel that it was committed to deliver under the terms of the prepaid delivery contracts.

The attorney general has charged that Newtown Oil violated the Connecticut Unfair Trade Practices Act, alleging the firm conducted “unfair or deceptive acts and practices.” The attorney general has termed Newtown Oil’s contractual practices as false, deceptive, and likely to mislead.

Instead of advising prepaid customers that it could not fulfill contractual obligations to provide fuel, the firm continued to sell such prepaid contracts and claim it would deliver the fuel, according to the state’s pending lawsuit against Newtown Oil.

According to that suit, “Although in severe debt and burdened with significant liabilities throughout the year of 2002, at no time did [the] defendants purchase fuel oil future contracts or maintain fuel oil in reserve to cover their obligations to supply more than 1,400 prepaid customers with more than one million gallons of home heating fuel.”

Mr Blumenthal has said he may also pursue criminal charges against Newtown Oil. The firm, which went out of business last December, was located at 47-49 South Main Street.

State officials believe that Newtown businessman William A. Trudeau, Jr, surreptitiously operated Newtown Oil. Last July, Trudeau was sentenced in US District Court in Hartford to a 22-month federal prison term, plus restitution and fines, following his guilty pleas to federal tax and financial fraud offenses. Those charges are separate from the home heating fuel scandal.