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July 12, 2005

ACORN, Alliance for Justice, American Association for People with Disabilities, Center for Auto Safety, Center for Responsible Lending, Consumer Action, Consumer Federation of America, Consumer Task Force for Automotive Issues, Consumers for Auto Reliability and Safety, Consumers Union, National Association of Consumer Advocates, Lawyers’ Committee for Civil Rights Under Law, National Community Reinvestment Coalition, National Consumer Law Center, National Employment Lawyers Association, Public Citizen, Rhode Island Public Interest Research Group, USAction, Workplace Fairness

National Public Interest Organizations Urge Rhode Island’s Governor to Sign Consumer Protection Bill

New Law Would Ban Contracts That Strip Consumers of the Right to Sue Corporate Wrongdoers

WASHINGTON, D.C. – Some of the country’s leading public interest groups are urging Rhode Island Gov. Donald Carcieri to sign H. 5985, a landmark bill that stops corporations from stripping consumers of the right to sue the companies in class action lawsuits. The bipartisan measure, which passed both houses of the state legislature by wide margins, would prevent corporations from slipping class action waivers into the fine print of their standard form contracts, where consumers are unlikely to see them or may have no choice but to accept their prejudicial terms.

Corporations are increasingly inserting clauses in contracts for everything from credit cards to car purchases that prohibit consumers from banding together in a class action lawsuit when they are victims of fraudulent and abusive business practices. Class actions level the playing field by allowing consumers whose individual claims are too small to warrant the expense of going to court to sue a corporation with far greater financial resources. Without this mechanism, corporations can break the law with virtual impunity, knowing that consumers will have no meaningful way to hold them legally accountable.

Rep. Charlene Lima introduced the Model Fair Consumer Contracts Act, as the bill is called, to solve this problem. It rebalances the scales of justice that were steeply tipped in favor of big business by a 1968 Rhode Island law shielding industries subject to state regulation from consumer lawsuits. Repealing this provision would restore the ability of individuals to take the corporations that harm them to court. It also would restore consumer class actions as a powerful deterrent against corporate wrongdoing.

Consumer advocates have applauded passage of the legislation, holding it up as a model for other state legislatures seeking ways to protect their citizens from coercive consumer contracts.  Unsurprisingly, a coalition of large corporations is heavily lobbying Carcieri to kill the bill.

“When corporations cheat consumers or break consumer protection law, they should not be able to avoid accountability by prohibiting consumers from joining together to challenge them,” said Joan Claybrook, president of Public Citizen.

“This is a matter of basic fairness,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “Corporations want to put themselves beyond the reach of the law by blocking the courthouse doors to injured consumers. American citizens have certain fundamental rights that they should not be forced to give up.”

“This bipartisan consumer bill restores the right of the little guys, the men and women and families of Rhode Island, to hold big corporations accountable when they break the law,” said Ed Mierzwinski, national consumer program director of Rhode Island Public Interest Research Group (RIPIRG). “So on behalf of our members and all Rhode Islanders we urge Governor Carcieri to sign it into law.”

“Big Business uses these stealth waivers to strip away the rights of victims of consumer and civil rights violations,” said Michael Foreman, deputy director of legal programs for the Lawyers’ Committee for Civil Rights Under Law. “The bill is a step in the right direction to allow the everyday person to level the playing field.”

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