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December 20, 2007

Miller: Enact Iowa Consumer Rights Act

“Iowa is the ONLY state where consumers can’t go to court under the state’s Consumer Fraud Act,” Miller said.

Des Moines. “It’s time for Iowa to leave the Dark Ages,” says Iowa Attorney General Tom Miller, and time to join the rest of the country.

“Iowa is the ONLY state in America where consumers have no right to go to court under the state Consumer Fraud Act – and it’s about time we change that,” Miller said.

Miller and a phalanx of advocates urged the Legislature to pass a “Consumer Rights Act” giving Iowa consumers a “private right of action” under the state’s Consumer Fraud Act. Iowa is the only state that denies its citizens the right to file a private lawsuit under the state consumer fraud law.

“That means the obstacles are very high for Iowans to obtain justice – and get their money back – if they are cheated by deception, misrepresentation and other unfair practices,” Miller said. “Fifty states have consumer fraud laws, but only in 49 can consumers go to court under their law. In this case, Iowa sticks out like a sore thumb, and it is high time we change that.”

Miller and State Rep. Eric Palmer of Oskaloosa, who is introducing the Private Right of Action bill, were joined by Bruce Koeppl (State Director of AARP), Betty Grandquist (Executive Director of the Iowa Assn. of Area Agencies on Aging), John Connors (Older Iowans Legislature board member and former long-time State Representative), and other advocates.

The advocates emphasized that the Consumer Rights Act bill is especially important for older Iowans, who often are victims of misrepresentation and deception. Miller said the law “would give consumers a fighting chance” if they were victimized in situations involving home improvements, used car sales, car repairs, home mortgages and many other kinds of transactions.

“This is an issue of fundamental fairness,” Miller said. “It 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. I totally reject any insinuation that this is an anti-business law,” he said. “It’s a fair-business law. And it’s a law that is long overdue in Iowa.”

Attorney General Tom Miller, former long-time State Rep. John Connors, and Betty Grandquist, Executive Director, Iowa Association of Area Agencies on Aging. (News conference Dec. 20, 2007, Old Supreme Court Room, Iowa State Capitol.)


From left to right: Bruce Koeppl, State Director for AARP (seated), Attorney General Tom Miller, Rep. Eric Palmer (Oskaloosa), former State Rep. John Connors, and Betty Grandquist, Executive Director of the Iowa Association of Area Agencies on Aging.


Background and more details

What the bill would do:

The Consumer Rights Act bill would give Iowa consumers a “private right of action” under Iowa’s Consumer Fraud Act, section 714.16 of the Code of Iowa, if they suffered a loss of money or property due to deception, misrepresentation or other unfair practices or intentional omissions by someone advertising or selling products or services, or soliciting charitable solicitations. The bill would permit them to seek damages and attorney fees and costs if they win.

“This is a garden variety private right of action bill,” Miller said. “Most states have had this for 30 years or more.”

“Iowa consumers theoretically now can try to bring a common-law action for fraud, but that is hardly a realistic option,” he said. “They have to prove reliance and intent, not just deception or misrepresentation, for example, and that’s a big hurdle,” he said.

“Perhaps even more important, the consumer now cannot recover attorney fees,” he said. “That simply strips the ability of most consumers to go to court and claim they were cheated. Let’s say you lose $10,000 to a home repair contractor who takes the money and does no work – what good is it to go to court if you can’t get the attorney fees needed to pursue the action?”

Miller said, “The Iowa Supreme Court got it right” a number of years ago when the Court said in a decision: “The protection afforded consumers by common-law remedies was generally ineffective. The burdens of a common-law action were sufficient to dissuade all but the most persistent and most seriously injured customer.”

The Attorney General’s Consumer Protection Division helps consumers recover millions of dollars every year, but that is no substitute for Iowans having a private right of action, Miller said. First, the AG’s Office cannot represent individuals in court – it represents the State. Second, the office brings cases involving the greatest number of victims and the most vulnerable victims, leaving many others only the alternative of going to court on their own.

From 2003 through 2007 to-date, the Consumer Protection Division has closed over 19,000 files on written complaints, with almost a fifth (3672) referred to contact a private attorney. The percentage is even higher for motor vehicle and home improvement complaints.

“There is no question,” Miller said, “that many consumers are left without relief even though they have been cheated in used-car purchases, home improvements and repairs, door-to-door sales, purchases of goods like appliances and electronics, and charitable solicitations.”

The Consumer Rights Act is good for business:

Miller said business groups that in the past opposed giving consumers a private right of action are misguided. “This right helps deter businesses that cheat, and that helps legitimate businesses who lose business to those who mislead consumers,” he said.

“Those in the Iowa business community who have opposed our past bills to create a private right of action for consumer fraud need to reconsider their position. They never have presented any examples of abuses by consumers in other states exercising their private remedies for consumer fraud,” Miller said.

“There never has been any serious attempt elsewhere to repeal this law, which exists in all other states, Washington D.C., the US Virgin Islands and Guam,” he said. “I’ve never seen a news report about the law causing any difficulty for a state’s economy. This law fosters fair competition. And it won’t clog the courts with private consumer fraud cases. That’s a red herring. It isn’t happening elsewhere,” he said.

“Finally, I must ask our opponents, ‘Don’t you care about your customers?’” he said.

“This law just gives consumers an even playing field and a fighting chance,” Miller said. “It’s about time Iowans get the consumer rights given to everyone else in the country.”

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