In a letter sent today to Governor Arnold Schwarzenegger, the Foundation for Taxpayer and Consumer Rights (FTCR) called upon Schwarzenegger to make the declaration of this week as “California Consumer Protection Week” real by immediately unfreezing rules and regulations his Administration has shelved, setting his first meeting with consumer groups, and standing up
to donors trying to gut California’s Unfair Business Practices Act.

The letter follows:

February 2, 2004

Governor Arnold Schwarzenegger
State Capitol
Sacramento, CA 95814

Dear Governor Schwarzenegger:

You have designated this week “California Consumer Protection Week.” However, since taking office in November, you have significantly lessened the state protections against abuse of consumers’ health, safety and money.

Since your proclamation states that the ” cornerstone of an advanced and robust economy is business integrity and consumer trust” and that ” [e]quipped with the latest information, consumers can avoid fraudulent commerce and make prudent choices in the marketplace,” we call upon you to make the following five commitments to protect consumers in California this week.

1. Return the force of law to consumer protection rules that have been placed on “opinion-only” status under Executive Order 2.

“California Consumer Protection Week” is the right moment to inform agencies that the consumer protection rules they have submitted to you under Executive Order 2 Paragraph 2 — rules not subject to official regulation and are “on an opinion-only basis which will not carry the force of law” — once again have the force of law.

Last week, our consumer group noted that the Department of Managed Health Care‘s “Underground Regulations Assessment,” submitted pursuant to your executive order, included many important consumer protections that are now meaningless. These included rules specifying HMOs are not able to deny benefits retroactively; HMOs have to respond to patient grievances in writing within 5 days; and HMOs must to cover emergency contraception dispensed by a pharmacist.

Other consumer-oriented guidelines currently without the force of law due to your order include these:

• The Consumer Mediation Program set up by the New Motor Vehicle Board. The goal of this program is to informally mediate solutions to disputes between consumers and new car dealers, manufacturers and distributors. Staff will provide consumers information on the Lemon Law, and refer such complaints to the appropriate entity for resolution.
• The Board of Optometry’s Policy for Public Disclosure of Complaints. This policy is utilized to determine what information regarding complaints, investigations and disciplinary actions against optometrist may be publicly disclosed. Similar policies are in abeyance at the Architects Board, Board of Professional Engineers and Land Surveyors, Board for Geologists and Geophysicists and Structural Pest Control Board.
• The Bureau of Automotive Repair Operational Guide for Smog Check Stations and Technicians. This is the reference document for smog check technicians and stations that provide information about the Smog Check inspection and repairs as well as information about the Smog Check Program. Similar operational reference guides for brake adjusters and automobile lamp adjusters were also gobbled up by this order.
• The Cemetery and Funeral Bureau’s Consumer Guide to Funeral and Cemetery Purchases. This and other guides are provided to the public to provide information regarding cemetery and funeral laws as well as price and service comparisons.
• The Office of Real Estate Appraisers Guidelines for Sanctions. This directive sets forth the various levels of sanctions (including size of fines) against appraisers for a range of errors from technical mistakes and sloppiness to major damages and ethical violations.

Regulation is one of the most important elements of consumer protection. Please inform state agencies this week that these and other consumer protection rules once again carry the force of law.

2. Release A List Of All Frozen Regulations Under Executive Order 2 And Your Intent Regarding Them.

Executive Order 2 also froze for six months all pending official state regulations that had not been officially adopted. These include many consumer protections such as publicly disclosing on the Internet doctors’ medical negligence standards, language competency standards at HMOs, and new standards for corporate accountants. Now is the time to unfreeze these rules or release a detailing of your recommendations about them. One of your pledges to Californians was for a more open government. This week you should live up to your pledge by releasing frozen rules or accounting for them.

3. Commit To Protect The Integrity of California’s Unfair Business Practices Act From Attack By Car Dealers And Other Donors To Your Campaigns.

The two ways Californians are protected from fraud is regulation and legal deterrence. Your displeasure with regulation has been well established and last week you appeared to also be ready to help some of your biggest political supporters, car dealers, succeed in their effort to gut legal remedies under California’s Unfair Business Practices Act — which deters and punishes fraud.

Car dealers have contributed over $750,000 to your campaigns and have also contributed $4.5 million for a proposed November ballot initiative that would take away the right of consumer, civil rights and environmental groups to sue to prevent unfair business practices, such as car dealers’ bait-and-switch schemes. (Dealerships that have contributed $381,500 to you have also contributed $625, 650 to the ballot initiative campaign.) It is this Act that is responsible for taking unsafe meat off supermarket shelves, removing MTBE from groundwater and stopping fraudulent HMO marketing. If car dealers have their way, however, such consumer protection lawsuits could not be brought under the Unfair Business Practices Act in the future.

Last week, the legal newspaper The Recorder reported you were likely to support legislation to help the car dealers reach their goal of rolling back the law. This week you should commit to protecting important provisions of the Unfair Business Practices Act that the car dealers and other big California companies that have also contributed to you have proposed tossing out. These include preserving the right of nonprofit consumer groups to bring cases, not just government entities; maintaining the public’s right to bring pro-active cases to prevent harm from occurring; and continuing to allow environmental damage, deception and other non-monetary losses to be a grounds for action under the Act.

4. Set Your First Meeting With Consumer Groups.

You have held many fundraisers and meetings with business groups and corporations but you have yet to extend an invitation to consumer groups to meet with you in order to hear our concerns. This “Consumer Protection Week” you should reach out to those who work to protect consumers daily.

5. Provide The Public With Your Definition of “Consumer Protection.”

Your definitions have often baffled the public. For example, your definition of “special interest” — labor unions and tribes, not corporations — is far more narrow than Webster’s definition of the term. This week you owe the public an explanation of your definition of consumer protection.

Too often large corporations have claimed the free market is the same thing as the free society. If you believe “the free market = the free society,” then you think that the less restrictions corporations face the freer all individuals are. Then the importance of the government making certain the market endures, expands, and thrives is no less than the future of society itself. Under this logic, there can be no limit on corporate intrusions in our private life, commercialization of schools, on corporate publication of private information, or on companies charging whatever they can. This is not consumer protection.

The public understands consumer protection to be ways in which consumers are protected from loss, injury, or annoyance. This often requires going against the wishes of large corporations and limiting their choices. What will you do for consumer protection? The public deserves to know.

We await your response.

Sincerely,

Jamie Court
Doug Heller