Readers have told us to look into these MLMs.
State moves closer to disclosing vital consumer complaints but there's more work to be done.
| Fran Silverman
Utah took a small step into the light this month when its legislature passed an amendment to its Government Records and Management Act (GRAMA) enabling certain consumer complaints that meet specific criteria to be disclosed to the public. TINA.org has tangled with Utah over this very issue in recent months and in the spirit of Sunshine Week, I want to acknowledge that any step toward more transparency is welcomed.
However, the state still falls far short of giving consumers access to vital information when they are trying to assess whether a company’s marketing claims hold water or how it treats its customers.
Our legal tussle with Utah began when I filed a routine open records request for consumer complaints against a multi-level marketing company headquartered in the state called WakeUpNow (WUN) and another request for complaints against three e-cigarette companies cited and initially fined more than $1 million by the state for “free” trial offers that in fact included repeated credit card charges, among other issues. Both requests were denied by the state’s Department of Commerce. On further appeal, the State Records Committee upheld the Department of Commerce’s denial of the WakeUpNow request, reasoning that complaints are exempt from disclosure because all consumer complaints are considered confidential investigative records. The state wouldn’t even disclose if there had been any complaints against the company or the number of complaints. Since that time, WUN, millions in debt, folded its U.S. operations, leaving distributors hanging
The State Records Committee, however, granted TINA.org access to the consumer complaints filed against the three e-cigarette companies since the state had already publicly cited the companies. More than 100 consumers had complained to the state before it announced its action against the companies, leaving us wondering how many consumers could have avoided getting ripped off if they had known about the mounting complaints that the state refused to disclose until TINA.org appealed to the Records Committee.
The initial denial of our requests for consumer complaints astounded me. The three main government agencies charged with protecting consumers – the Federal Trade Commission, the Food and Drug Administration and the Consumer Finance Protection Board, readily disclose consumer complaints. And most states do too. Indeed, Utah’s denial prompted us to delve further and find out exactly how many disclose complaints. Preliminary results of our survey — which consisted of sending open records requests for consumer complaints against WUN to all 50 states — show an overwhelming majority releases them. Three states, New Hampshire, Hawaii and Oregon, even have online searchable databases with information on consumer complaints against companies. South Carolina posts a “buyer beware” list of companies that haven’t responded to or settled all complaints against them. Even a few of the states that don’t disclose the complaints (more on these as we finish our study) will at least tell you how many complaints have been filed against a company.
But Utah’s legislation, which is on its way to be signed by Governor Gary Herbert, will only disclose a consumer complaint against certain companies if it is one of 50 or more complaints filed within the last four years, or if the consumer claims to have lost $3,500 or more. So, if 49 consumers complained, each having lost $3,499 (or a total of $171,451) to a scam company, no one would ever know (unless and until the state takes action and publicly cites the companies, emphasis on unless and until). Or if only one consumer out of 49 who complained said they lost $3,500 or more, you’d only be able to view that one complaint, not knowing there might be 48 more. And what about if 49 consumers complain alleging they lost their entire life savings to a scammy company without putting an exact dollar amount on it? Under the proposed legislation, no one would ever know
In addition to this limiting language, there is this: If a government division determines through an administrative proceeding that the consumer complaint is “non meritorious” then it isn’t disclosable.
To help me understand the thinking behind all these barriers to obtaining complaints about businesses, I talked this week with Utah State Sen. Curtis Bramble, the chief sponsor of the amendments and an advocate for open government who earned the Utah Media Coalition’s 2012 Shining Light Award for helping to repeal a 2011 law that gutted Utah’s open records act and supported adding language to its laws to make it clear that all records are presumed to be open– absent limited circumstances.
It’s these limited circumstances that are the problem with the new legislation.
In a state where two previous attorneys general have been indicted and charged with bribery and tampering with evidence, Bramble said the new legislation was an attempt to strengthen public oversight and transparency within government agencies. He said he gathered input from the state Department of Commerce, media outlets and businesses to come up with a bill that would be a reasonable step in disclosing complaints to the public under GRAMA.
“The target of this legislation is the bad actor perpetrating fraud against citizens, the get rich quick folks, the business opportunity folks, the current snake oil salesmen,” Bramble said. He added that the section regarding whether a complaint is meritorious and thus even is considered disclosable protects businesses from frivolous complaints — such as rude customer service representatives — from harming their reputations. (Which, frankly, I think does matter. I know I don’t want to deal with a business that has rude customer service representatives especially if it has advertised great customer service. Tone at the top, people, tone at the top.) But ok, I get the gist of the notion of frivolous complaints. Under the legislation, in order for the state to consider a complaint meritorious it has to include some element that a business is violating Utah laws.
Still, if you put this legislation into play, it might mean that many significant complaints against WUN would still not be disclosed. Consumers in the state would not know that many might have complained to the state — as they have to the FTC — that the company’s structure had the makings of a pyramid scheme. Indeed, under this legislation, Utah consumers or any consumers across the nation would also not be warned that consumers had complained about those three e-cigarette companies that were promising free products only to wipe out some consumer bank accounts with repeated charges. Does it make the complaints stronger if 49 people say it — which would be kept from consumers view because it didn’t meet the triggering 50 complaint bar — or 99 complain of the same rip-off? The pattern is there and how many consumers could have been saved from this scam if they had known about the complaints?
Bramble admits the legislation is limiting.
“No statute we pass is perfect,” he said. “For Utah, this was a significant step in terms of greater transparency.”
We think language currently existing in Utah laws already allows consumer complaints to be disclosed (see our recent GRAMA request on another multi-level marketing company. This legislation if it becomes law may actually make it more difficult to obtain complaints.
The motto of Sunshine Week is “open government is good government.” We hope Utah continues to move toward transparency so consumers won’t be left in the dark about how any company conducts its business. As Utah’s Salt Lake City Tribune said in an editorial on this issue: “An open process is not an unfair process. The public is capable of judging the accusations.”
This blog was updated on 2/23/16.
Readers have told us to look into these MLMs.
TINA.org’s push to get the state to disclose vital consumer records.