Y2K Legislation Hurts Consumers, Small Businesses

July 1, 1999

Y2K Legislation Hurts Consumers, Small Businesses

Consumer Protections Trampled in White House Negotiations

WASHINGTON, D.C. — The deal cut by the Clinton/Gore Administration with the Republican leadership over Y2K legislation that is likely to be debated in the House and Senate today does nothing to protect the rights of consumers and small businesses, said consumer group Public Citizen.

“There is nothing for consumers in this bill. The protections are for manufacturers of defective products who will not have to fix the problems caused by their computers,” said Public Citizen President Joan Claybrook. “Small businesses and consumers will be ripped off and left to pay for the manufacturers? mistakes.”

The legislation will harm consumers in many ways:

  • The owners of a grocery store who discover on January 1, 2000, they have a Y2K defective computer will have to wait up to 90 days — til March 30, 2000 — before they can file suit unless the defendant does not respond with a proposal for remedial action within 30 days or an offer to engage in alternative dispute resolution. But there is no requirement that the grocery store?s defective computer be fixed quickly or at an affordable price, even though the losses it suffers during those three months could force it out of business.
  • If a family whose home security system fails because of a Y2K defect joins with other families to bring a class action against the manufacturer of the faulty system, it can sue only through federal, not state, court — adding expense and delay to the case.
  • A pharmacy that closes because it can?t fill prescriptions due to a Y2K failure may be able to recover only a small part of its costs and damages if more than one company is at fault and one of them cannot pay its share of a judgment.
  • If a chemical manufacturer with fewer than 50 employees releases toxic substances into a neighborhood because it failed to take any steps to fix its computer systems, it can only be liable for a maximum of $250,000 in punitive damages — no matter how reckless its behavior.

“Every provision makes it more difficult for consumers and small businesses who suffer losses from Y2K defects to be compensated,” said Claybrook. “This legislation will protect the very same corporations that knowingly created the Y2K defect for their own profit and have failed to fix the defect.