"Every other state now gives consumers such a 'private right of action,'"
Miller said. "It is time we give Iowans this key tool that is available
to consumers everywhere else in the nation."
The "private right of action" would give consumers a right to go to court
to enforce Iowa's Consumer Fraud Act, which prohibits unfair or deceptive
practices and fraud or misrepresentation in the sale of goods or services.
Iowa law now only permits the State to enforce the Consumer Fraud Act.
Now, consumers who are cheated only can go to court under common-law,
which carries a much higher standard of proof and does not allow for recovering
"Current law is stacked against ordinary consumers," Miller said. "We
need to level the playing field. It's too easy for people to be cheated
and too hard for them to make it right."
Miller emphasized that the change will benefit consumers of all kinds,
including farmers, small businesses, and ordinary consumers who are cheated
in situations ranging from auto sales and repair to predatory lending,
home-improvement schemes, and bogus travel packages.
"Legitimate businesses have nothing to fear from this proposal," Miller
said. "For one, businesses often are the victims of fraud themselves,
such as phony invoice schemes and telephone scams. This will help them
make it right - and help deter con-artists in the first place."
Miller said the proposal won't lead to an explosion of frivolous lawsuits.
"That's a red-herring and a false accusation. It hasn't happened in the
other states that have the private right of action, and it won't happen
here. People still have to have a meritorious case when they go to court,
and they won't be going to court if they weren't cheated. Furthermore,
when the consumer has a legitimate case, the matter probably will be resolved
out of court anyway, thanks to this right."
Miller said it is ironic that Iowa, which has a strong consumer reputation,
is the only state in the nation not to give citizens the private right
of action to enforce the state consumer fraud law.
"We have a good consumer fraud law in most respects and we work very
hard to enforce it," Miller said, "but consumers would benefit from having
the added leverage of being able to sue to protect themselves when that
becomes necessary. It's like putting another cop on the beat."
"Our Consumer Protection Division is among the most active in the nation,
but we can't be everyone's private attorney," Miller said. "We have to
focus our limited resources on cases that affect a lot of people or target
especially vulnerable groups, such as older Iowans. We simply cannot pursue
all fraud cases as far as consumers sometimes deserve. Our resources have
shrunk even while new scams are proliferating over the Internet and by
phone and mail. This will give more Iowans a fair chance to redress their
grievances in court when other remedies aren't available."
Miller said Iowa law grants the private right of action in several areas
- including membership campgrounds, identity theft, and long distance
telephone slamming -- and that has not sparked any explosion of litigation.
"The Legislature has been adding this right periodically in recent years,"
Miller said. "It's working, and we should make this right uniform across
the spectrum for Iowans."
Iowa consumers are the only ones in the nation who must rely on common
law when they are victims of fraud. Common law is often impractical to
use because it requires a higher burden of proof than consumer fraud statutes,
including proving "intent." In State v. Hydro Mag, the Iowa Supreme
Court noted that the consumer fraud laws were enacted because "The protection
afforded by common law remedies was generally ineffective. The burdens
of a common-law action were 'sufficient to dissuade all but the most persistent
and seriously injured consumer.'"
Attorney General Tom Miller (4th from left) with members
and staff of AARP at the State Capitol, January 25, 2002.