Consumers Union * Public Citizen * USPIRG * Center for Justice & Democracy * Consumer Federation of America * USAction * Alliance for Justice

 

May 26, 2005

Consumer Groups Express Strong Support for Law Enforcement Efforts of Attorneys General Nationwide

WASHINGTON, D.C. – In response to a U.S. Chamber of Commerce conference held here today to explore the effects of so-called “activist” state attorneys general, consumer groups highlighted just a handful of the many achievements for the public of state attorneys general across the country, calling them “a critical bulwark of protection against fraud and unfair and deceptive practices.”

The groups – which include Consumers Union, Public Citizen, USPIRG, Center for Justice & Democracy, Consumer Federation of America, USAction and Alliance for Justice– are troubled by the Chamber’s suggestion that enforcing the law, holding wrongdoers accountable, fostering consumer confidence in a complex marketplace and protecting consumers will have a negative impact on the business climate in this country. State attorneys general perform a vital role in protecting consumers and businesses from the unfair business practices of those corporations that seek to make a profit and get ahead by breaking the law. Consumer protection and law enforcement by state attorneys general are essential to a vibrant and fair economy, to the preservation of federalism, to the supervision of entire sectors of the economy and to the safeguarding of one of consumers’ last avenues for redress.

The groups noted significant cases in which state attorneys general had prosecuted consumer protection violations and won impressive victories for consumers and taxpayers in the process. Included are the following examples:

Drug Pricing

In a series of cases, state attorneys general took coordinated enforcement action against multinational pharmaceutical companies that broke antitrust laws to prevent consumers’ access to cheaper, generic drugs. The companies’ unlawful conduct cost consumers and taxpayers hundreds of millions of dollars, but the harm extended far beyond mere money. The drug companies rendered patients less able to combat heart disease, cancer, anxiety and Alzheimer’s. The effort of the state attorneys general produced settlements that provided restitution to consumers and taxpayers, and reformed the companies’ business practices.

Predatory Lending

Household Finance victimized thousands of consumers across the country with predatory lending practices that targeted the most vulnerable among us. Attorneys general launched a multistate enforcement action against Household. The result was a $474 million settlement that provided restitution to victims and substantial, pro-consumer reforms of Household’s lending practices.

Price-Gouging

Energy companies gouged California consumers – and businesses – to the tune of billions of dollars during the energy crisis of 2000-01. The federal regulator that was supposed to protect ratepayers (the Federal Energy Regulatory Commission, or FERC) slept through the crisis. The California Attorney General moved to fill the enforcement void, launching an investigation of the industry’s market conduct. California has filed dozens of lawsuits against generators and marketers, and the attorney general represented the state before FERC in California parties’ quest for $9 billion in refunds. The California Attorney General’s Energy Task Force has negotiated $3.3 billion worth of settlements that have provided about $2.6 billion in benefits to ratepayers.

Investor Fraud

The New York Attorney General has uncovered numerous fraudulent deeds and practices – including illegal market timing and excessive fees – by mutual fund companies, and reached financial settlements, many of them in groundbreaking cases resulting in profit disgorgements, penalties, restitution and fee reductions that put money back in investors’ pockets.

Settlements reached by that office include such companies as Alliance Capital Management, which agreed to a $600 million package to cover its mutual fund misdeeds;   MFS, which agreed to pay $350 million; Bank of America and Fleet Boston, which agreed to pay $675 million; and Janus, which agreed to pay $225 million. Strong Capital Management agreed to pay a $175 million settlement, with the president of the company contributing $60 million and accepting a lifetime ban from the industry.

Tobacco

State attorneys general banded together to fight the tobacco companies, which for decades lied to the American public about the dangers lethal consequences of using their products. The result was an historic national settlement in1998 that required tobacco companies to pay the states $206 billion. Equally important, the Master Settlement Agreement prohibited marketing tobacco products to children and mandated other reforms of the industry practices that endangered public health.

Pollution

A coalition of nine state attorneys general recently filed a lawsuit challenging the Environmental Protection Agency’s new relaxed mercury pollution standards. The suit asserts that the new rule fails to protect the public – especially children – from the toxic emissions from coal-fired power plants, the single largest source of uncontrolled mercury pollution. Mercury gets into the food chain and when consumed by young children and pregnant or nursing mothers can cause permanent brain and nervous system damage. Fish from waters in 45 states have been declared unsafe to eat because of the level of mercury they contain.

In addition to these major cases, nearly every day, state a Attorneys gGeneral across the country file cases protecting consumers against fraudulent business practices that are often aimed at the poor and elderly.

Below is a sampling of fraud cases brought this week alone: 

On May 25, the Florida Attorney General filed a civil lawsuit against a South Florida plumbing company alleging numerous violations of Florida’s Deceptive and Unfair Trade Practices Act and, in particular, that alleging the company charged grossly inflated hidden costs fees for repairs.

On May 24, the Massachusetts Attorney General filed a fraud case against a local firm, alleging it had deceived consumers into signing contracts for major home renovations, collected hefty deposits and then failed to deliver on those contracts.

On May 24, the Ohio Attorney General filed suit against a furniture store for violations of the Consumer Sales Practices Act in selling furniture. Over the past six months, the Attorney General’s Office received more than 120 consumer complaints about a Cleveland-based furniture chain. The complaints claimed that the store failed to deliver furniture it sold and refused to provide refunds for furniture not received.

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