Advocates hope consumers win private right to sue for fraud

DES MOINES – Iowans seeking a private right to sue over consumer fraud said Wednesday they believe they're succeeding because scare tactics to defeat their legislation are on the rise.

Bruce Koeppl, AARP Iowa state director, said bills to establish a private right of action to bring civil suit against individuals or businesses under the state's consumer protection law have cleared House and Senate committees. Iowa currently is the only state without such protection.

“We've moved the issue farther than any time that we've been involved,” Koeppl said. “We feel like there is momentum, but unfortunately there are suggestions about this bill that just are not accurate that are being passed along.”

The AARP leader said opponents are trying to paint the legislation as a vehicle for making lawyers rich with absorbent settlements when it contains safeguards and exemptions narrowing it to protect consumers – especially seniors – from unscrupulous rip-off artists.

“It's a very middle-of-the-road proposal that uses the most common provisions that are out there around the country,” said Iowa Assistant Attorney General Bill Brauch, who is in charge of the agency's consumer protection division.

“It has momentum and I think now the opponents of the legislation are a bit in panic mode and they're throwing out false accusations about the bill,” he said. “I think they see the writing on the wall that it actually has a very good chance of passing.”

The Iowa legislation includes exemptions for many regulated, trained professionals, but targets problem areas such as new and used car sales, car repair and home improvement businesses, telemarketers and sweepstakes, backer said.

However, Andy Warren of the National Federation of Independent Business Iowa chapter said current Iowa law already provides redress for fraud victims. The current economic recession is no time to create new costs for businesses already struggling with rising expenses and sales slumps.

“Once you sort of deputize every lawyer in the state, that will create that many more lawsuits as opposed to just having it come from the AG's office,” he said. “We're concerned that this will turn into a new way to sue businesses.”

Warren said the consumer fraud legislation was a broadly written “catch-all” that could carry a number of unintended consequences that will be detrimental to small businesses.

Proponents said the Attorney General's Office recovers more than $1 million annually for consumers through complaint handling, lawsuits and settlements. But an estimated 3,500 to 5,000 Iowans are victims of fraud each year who are left without any ability to recover their losses.

“Our whole intent here is just to even up the ballgame so consumers have a fair chance,” Brauch said. “Right now they really don't have much of a remedy.”