House, Senate pass private cause of action bill

DES MOINES - Iowa consumers would be able to bring legal action against dishonest businesses under House File 712, approved by the Legislature Monday.

"Today is a landmark day for consumers and for honest businesses in Iowa," Sen. Keith Kreiman, D-Bloomfield, said.

The right to a "private cause of action" has been sought by Attorney General Tom Miller for 19 years, according to the bill's House floor manager Rep. Kurt Swaim, D-Bloomfield. He's been working on it seven years, Swaim said, "I'm getting tired."

The bill, limited in scope by an amendment that carved out several exemptions, doesn't go as far as Miller or Swaim preferred.

"It's a moderate bill," Swaim said. "It goes a long way toward protecting Iowa consumers."

Kreiman called the bill, which allows individual consumers to sue businesses, "a day of reckoning (with) long-overdue consequences for dishonest businesses who prey upon the weak and the unsophisticated consumer."

Currently, Iowa is the only state in the nation that doesn't allow individuals to sue a business if they believe they have been defrauded. Instead, they have to file a complaint with the Attorney General's Office in hopes it sues the business. The attorney general gets between 4,000 and 5,000 complaints a year and would need 40 to 50 more attorneys on staff to take all the complaints to court, Swaim said.

"With passage of this bill, Iowa will join the 49 other states who allow a private cause of action for violations of consumer fraud," Kreiman said. "It is a day long coming."

As amended, several industries were protected from private cause of action. They include cable television providers, phone companies, funeral homes, real estate agents, financial institutions and public utilities.

Swaim conceded backers of the attorney general's bill had to accept compromises to win passage of HF 712. It still cover the sources of those businesses that generate the most complaints -- home improvement contractors, debt collectors, mortgage brokers, car repair shops and car dealers, Swaim said.

AARP, which represents people 50 and older - a major target for consumer fraud, according to the bill's sponsors, welcomed passage of the bill despite being disappointed in the strength of the final version of the bill.

"We are particularly concerned about the insurance industry and the recent decision seemingly out of the blue to add the cable industry to the exempted groups," spokeswoman Ann Black said.

He estimated 99 percent of Iowa businesses treat consumers fairly, Swaim said. HF 712 gives the rest a chance to clean-up their act. The bill should deter consumer fraud, he said.

A key element of the bill is that in addition to collecting actual damages, consumers will be able to collect attorney's fees if they prevail, Swaim said. In many cases, he said, consumers are reluctant to pursue action because attorney's fees are greater than the actual damages.

The vote was 95-1 in the House and 48-1 in the Senate.

The House also approved HF 756, which makes changes in the Surface Water Task Force created last year to consider watershed and floodplain mitigation management. In doing so, the House added language creating the Mississippi River Partnership Council. It will be a forum for city, county and state government, agriculture, business, conservation and environmental stakeholders to discuss common concerns.