Attorney general's consumer fraud proposal derailed again
Posted: Tuesday, April 01, 2008
DES MOINES, Iowa (AP) -- Attorney General Tom Miller said he's disappointed that lawmakers have again rejected legislation that would allow consumers to file a lawsuit under Iowa's anti-fraud act.
Miller said Iowa is the only state where consumers don't have such a right.
The measure would have given Iowans a "private right of action," or the ability to sue a business or person under the state's Consumer Fraud Act, which prohibits unfair and deceptive trade practices. The consumer could seek damages, attorney fees and costs in a winning case.
Under Iowa's current law, consumers can pursue a common-law action for fraud, but Miller said that's unrealistic for many people because they can't recoup attorney fees and other costs.
"We are disappointed the consumer rights act legislation likely is dead for this session ... It was a moderate and effective proposal," Miller said in a statement.
Officials with his office said they had tried at least a half-dozen times to pass such protections, and Miller promised he'd try again.
"I think we will find a way to convince the Legislature to provide this right for consumers," he said.
The bill is considered dead because it failed to meet a legislative deadline as the session edges toward likely adjournment later this month. A version of the bill was approved by the House Judiciary Committee, but it was stripped of its strength and only expressed the Legislature's intent to protect consumers.
"It got gutted," said Rep. Kraig Paulsen, R-Hiawatha.
Paulsen said Miller's version was overreaching and would have forced businesses to defend themselves against trivial matters.
"The greater concern is the mom-and-pop shop where it costs you $500 to call your lawyer, let alone to actually go in to court," he said.
Paulsen said a legislative interim committee will study the issue before the next session.
Miller's move has pitted him against some big industries, including banking, real estate, health and insurance.
John Gilliland, a vice president for the Iowa Association of Business and Industry, said Miller has insisted on presenting a bill that has low standards of legal proof and no requirements to show that the consumer was actually defrauded before they can file a lawsuit.
"Industry has been very reluctant to support a bill that would just throw open potentially meritless lawsuits," said Gilliland.
Miller notes that Iowa is the only state without such rights for consumers, but Gilliland said other states are tightening their consumer protection statutes because of meritless lawsuits.
Miller has dismissed claims that the measure is anti-business. Last December he said the legislation "gives a fair shake to consumers, and to the vast majority of honest businesses who play by the rules, tell the truth, and treat consumers fairly."
According to lobbyist declaration records, opponents of the measure included out-of-state giants such as Johnson & Johnson, Wal-Mart Stores Inc., GlaxoSmithKline, Monsanto Co. and Microsoft Corp. In-state businesses that opposed it included Casey's General Stores, Hy-Vee Inc., Principal Financial Group and Meredith Corp.
Supporters included the Iowa Trial Lawyers Association, Iowa Association of Area Agencies on Aging, the League of Women Voters of Iowa and unions including the United Steel Workers of America, Iowa Federation of Labor AFL-CIO and AFSCME Iowa Council 61.
Iowa Citizen for Community Improvement noted the many lobbyists declarations against the bill.
"The voices of three million everyday Iowans are being drowned out by 170 special interests, and I'm not surprised the way the current system is set up," CCI member Judy Lonning, of Des Moines, said in a statement.
Miller said Iowa is the only state where consumers don't have such a right.
The measure would have given Iowans a "private right of action," or the ability to sue a business or person under the state's Consumer Fraud Act, which prohibits unfair and deceptive trade practices. The consumer could seek damages, attorney fees and costs in a winning case.
Under Iowa's current law, consumers can pursue a common-law action for fraud, but Miller said that's unrealistic for many people because they can't recoup attorney fees and other costs.
"We are disappointed the consumer rights act legislation likely is dead for this session ... It was a moderate and effective proposal," Miller said in a statement.
Officials with his office said they had tried at least a half-dozen times to pass such protections, and Miller promised he'd try again.
"I think we will find a way to convince the Legislature to provide this right for consumers," he said.
The bill is considered dead because it failed to meet a legislative deadline as the session edges toward likely adjournment later this month. A version of the bill was approved by the House Judiciary Committee, but it was stripped of its strength and only expressed the Legislature's intent to protect consumers.
"It got gutted," said Rep. Kraig Paulsen, R-Hiawatha.
Paulsen said Miller's version was overreaching and would have forced businesses to defend themselves against trivial matters.
"The greater concern is the mom-and-pop shop where it costs you $500 to call your lawyer, let alone to actually go in to court," he said.
Paulsen said a legislative interim committee will study the issue before the next session.
Miller's move has pitted him against some big industries, including banking, real estate, health and insurance.
John Gilliland, a vice president for the Iowa Association of Business and Industry, said Miller has insisted on presenting a bill that has low standards of legal proof and no requirements to show that the consumer was actually defrauded before they can file a lawsuit.
"Industry has been very reluctant to support a bill that would just throw open potentially meritless lawsuits," said Gilliland.
Miller notes that Iowa is the only state without such rights for consumers, but Gilliland said other states are tightening their consumer protection statutes because of meritless lawsuits.
Miller has dismissed claims that the measure is anti-business. Last December he said the legislation "gives a fair shake to consumers, and to the vast majority of honest businesses who play by the rules, tell the truth, and treat consumers fairly."
According to lobbyist declaration records, opponents of the measure included out-of-state giants such as Johnson & Johnson, Wal-Mart Stores Inc., GlaxoSmithKline, Monsanto Co. and Microsoft Corp. In-state businesses that opposed it included Casey's General Stores, Hy-Vee Inc., Principal Financial Group and Meredith Corp.
Supporters included the Iowa Trial Lawyers Association, Iowa Association of Area Agencies on Aging, the League of Women Voters of Iowa and unions including the United Steel Workers of America, Iowa Federation of Labor AFL-CIO and AFSCME Iowa Council 61.
Iowa Citizen for Community Improvement noted the many lobbyists declarations against the bill.
"The voices of three million everyday Iowans are being drowned out by 170 special interests, and I'm not surprised the way the current system is set up," CCI member Judy Lonning, of Des Moines, said in a statement.
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Sean wrote on Apr 1, 2008 8:36 AM:
Why is Iowa the only state that does not have such a provision ... or i should ask why do other states have the provision if it would be so horrific? "