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The Development of Consumer Rights in the United States Slowed by the Power of Corporate Political Contributions and Lobbying
By Richard Alexander
Classical economic theory holds that buyers and sellers are equal in rights, responsibilities and power. To be equal means that the consumer must not only be well informed, but also be able to exercise and enforce legal rights, and have the benefit of laws will that protect the consumer from abuse by sellers and manufacturers. While it is true that consumers as a group have the potential to influence the market with their buying decisions, individual buyers have no such power and sellers in large part control the modern market through domination and control of the legislative process, the pace of appellate judicial decisions, executive rule-making, and media markets.
The development of consumer protection statutes in the United States clearly demonstrates the immense political power of American corporations to slow and stifle the advancement of consumer rights by precluding the adoption of common sense laws for decades through the legalized influence peddling that passes for the American political process.
First, through lobbying and industry political contributions, the rules of the legal game are written by industry insiders, lobbyists, and political contributors in the back rooms of Congress and legislatures across the U.S. Citizen groups have little political influence because they cannot compete financially with Political Action Committees controlled by major corporations and industry associations and only have the power of public disclosure to counter-balance the significant control that business has over the legislative drafting process.
Second, the average consumer does not have the foggiest idea of the administrative law process in the U.S. where substantial laws are written by government agencies which have been delegated the power to micro-manage specific subjects, such as automobile safety [National Highway Traffic Safety Administration], pesticides [Environmental Protection Agency] and pharmaceuticals [Food and Drug Administration]. These agencies engaged in sophisticated rule making that takes places over long periods of time and which requires the highest level of sophistication. The administrative law process of giving notice of proposed rule making, comments, hearings and later court challenges to contest the scope of governmental rules and regulations results in substantial power to those who can stay the course and dedicate the time and resources to the process, i.e. corporate law departments, industry associations and industry lobbyists.
Third, corporate America has the resources and staying power to take legal action to delay the implementation of both new rules and to contest the application of those rules well beyond the ability of any average person.
For example, when EPA challenged Dow and other major pesticide manufacturers in the early 1970s to halt the production of 2,4 D and 2,4,5 TP, pesticides known to have been contaminated with deadly dioxins and furans, the industry fought administrative proceedings for nearly six years before voluntarily quitting - once its supply of in-house product had been sold and shelves cleared by sending the goods outside of the country. This delaying action was taken even though DOW's own research showed that other chlorinated pesticides were so contaminated by the manufacturing process that its own workers developed signs of chemical toxicity in the form of chloracne and the company itself reformulated its pentachlorophenol product, Dowicide 7, and renamed it Dowicide EC-7 [extra clean] after the Michigan legislature had ruled the use of Dowicide 7 illegal in Dow's home state.
Fourth, the general negligence and product liability laws of most states do not protect consumers from defective products except in cases where, after the fact, the product has caused injury or death.
Suing a corporate manufacturer for selling defective products in the absence of injury requires proof of fraud, deception in the sale, or breach of warranties. The terms and conditions of warranties are set at a minimum base level by the Uniform Commercial Code which has been adopted by all states but beyond that set of promises all manufacturers limit any additional obligations to consumers.
Fifth, the economics of litigation provide corporations and large multi-national companies with overwhelming advantages in controlling the development of appellate decisions that influence and control the authority and power of trial courts. Because corporations have a perpetual stake in the development of the law they readily take appeals when it suits their business purpose. Individuals on the other hand only take appeals when they can afford to do so and when they must. The absence of civil public advocates for consumer interests as friends of the court is reflected in a distinct pro-corporate bias in the law.
Sixth, secret settlements and "gag" orders imposed as a condition of settlements limit the public's knowledge of what products are dangerous. Under federal law certain defective products that cause injuries and result in settlements must be reported to the Consumer Product Safety Commission, but this statute has limited application to consumer, toys and household goods.
On the plus side one state provides consumers with a set of valuable legal rights, namely California's Consumer Legal Remedies Act which has yet to be adopted by other states or by the United States government. The CLRA provides valuable consumer protections and, equally important, special legal procedures to expedite the court's ability to order consumer relief when there are abuses with a minimum of legal complications.
Consumer advocates have sought to raise the consciousness of consumers and to create a body of law to protect consumers but public advocates suffering from minimal funding have had a much lesser impact than the corporate lobbyists. In large part the development of law by Congress, state legislatures, administrative governmental offices at the federal and state level and the courts has been orchestrated and controlled by multi-national corporations, who write the rules of the game and the only times when consumers are successful is when the power of an idea is so overwhelming that not even the most jaded politician can vote against the public interest on an issue that has attained high public visibility.
The strongest tools employed by consumers include lobbying, publicity by consumer organizations and class action lawsuits, an extremely powerful tool for correcting cases of consumer abuse that is much hated by American business, in which the private bar serves as private prosecutors of corporate wrongdoing under the control of trial court judges.
On the other side of the ledger, public relations techniques are effectively used by corporations to maintain the ability of the corporation to plausibly deny reality or to develop "science" that aids and abets corporate profiteering.
For example, Dow Chemical Company has exploited "research findings" influenced, controlled or funded by breast implant manufacturers to develop a base of questionable data upon which to claim that silicon breast implants are safe. These studies are "low powered" epidemiological studies which in rigorous scientific circles are recognized as having limited value. They are the equivalent of using opera glasses to look for the moons of distant plants and then claim that there are no moons of Jupiter to be seen with such devices, which is absolutely true, but which at the same time can be readily contradicted by the use of a precision telescope designed and capable of spotting such distant celestial objects.
American tobacco companies have been grossly successful in buying time from being outlawed. Thousands of Americans die annually from tobacco-related illnesses, and cigarettes are the cause, which is not disputed by the federal government and medical professionals. Yet cigarettes are successfully sold at great profit because the companies have funded "research" to create a false controversy about the health implications of tobacco which gives them the "cover" to claim that the evidence against tobacco is not conclusive. Others have labeled this phenomenon as "cigarette science." - clearly science in name only that advances industry profits at the expense of the public and consumers.
The U.S. consumer movement that came to blossom in the 1960s has its foundation in the development of the common law which first recognized in the 1950s a new and significant legal doctrine in cases of personal injury caused by defective products.
Product liability law, first known as strict liability in tort, was the first significant recognition that when mass produced products are used in normal fashion and failure to perform as expected or when they are designed in such a fashion as to be unreasonably dangerous, a injured person need not prove that the seller was negligent, but instead can hold the seller and manufacturer legally responsible upon a showing that the defective product caused their injury.
This legal development was a giant step forward for the average consumer who totally relies on manufacturers in producing a wide range of consumer products.
It was from this theoretical foundation that the consumer movement developed. As consumer attorney Ralph Nader noted "the best way to ask society how the economy is doing is to measure the health, safety and economic well-being of consumers."
Health, safety and economic well-being became the touchstone of consumerism but it is significant to note that the concepts spring from the common law . Mr. Nader's training as a lawyer and his enunciation of consumerism clearly set forth the common law legal standard that marked safety and health policies underlying injury and death cases caused by defective products.
It is this expanded definition of consumerism, well beyond a strict economic value, which includes considerations of health and safety that has become the backbone of consumerism today.
In 1962 President John F. Kennedy declared four basic consumer rights which institutionalized and expanded consumer expectations in the United States to include the right to safety, the right to be informed, the right to choose and the right to be heard.
While this is clearly a benchmark in the consumer movement, it was not until consumer activists began to have an official role in government as consumer counsel that a public pulpit and allowed the consumer movement to have a legitimate voice and a modern identity. With the growing recognition of consumer rights, the American political system began moving towards developing a statutory framework to address consumer issues. But throughout the process he hallmark of consumer protection laws has been the role of business and industry to impede the adoption of safety standards and to delay advancement of salutary health and safety mandates, often times for decades.
As the following partial list shows the rate of adoption of new consumer protection statutes has gained momentum as the pubic has been forced by circumstances to recognize the need to counter-balance the runaway authority and control of large business in the marketplace over largely helpless consumers. Nonetheless, as this partial list shows, the political clout of business and industry has slowed the passage and adoption of safety and consumer protection laws to suit the demands of corporate interests. At virtually every juncture the recognition of consumers rights has been kept at a snail's pace to accommodate the interests of manufacturers and sellers whose political contributions far exceed those of the average voter. There is no better case for the reform of the political campaign funding laws than that evidenced by the controlled development of consumers' protection statutes by American business.
1887
Interstate Commerce Act establishes Interstate Commerce Commission and provides for federal regulation of railroads.
1890
Sherman Antitrust Act prohibits certain unfair business practices, such as price fixing and monopolies.
1906
Pure Food and Drugs begins supervision by the federal government of interstate sales of food and drugs.
1907
Meat Inspection Act institutes federal inspection of meat sold in interstate commerce.
1914
Federal Trade Commission created to enforce antitrust laws and to unfair competitive practices.
Clayton Act restrains exclusive dealing, merging, and interlocking directorates.
1934
Federal Communications Commission established.
1936
Consumers Union, Inc. was born..
1938
Federal Food, Drug and Cosmetics Act requires that drugs be pretested for safety before sold to the public. But industry is protected by provisions that additives are presumed to be safe until proven otherwise. No requirement for pre-market testing of cosmetics.
Wheeler-Lea Amendment to the Federal Trade Commission Act increases the FTC power to control unfair or deceptive acts or practices, including false advertising.
Civil Aeronautics Board established.
1953
Flammable Fabrics Act requires apparel shipped by interstate commerce to conform to flammability standards.
American Council on Consumer Interests is founded.
1954
Massachusetts Consumer Counsel created. First state cabinet level position for consumer advocate. Governor Averill Harriman makes first appointment.
1958
Food Additives Amendment to the Food, Drug and Cosmetics Act. Manufacturers must finally establish safety of a food additive.
1959
California creates Second Consumer Counsel office. Governor Edmund "Pat" Brown of California makes the appointment.
1960
Federal Hazardous Substances Labeling Act mandates warning labels on household chemicals and requires instruction for safe use.
Color Additives Amendment to the Food, Drug and Cosmetics Act
1962
Kefauver-Harris Drug Amendments to the Food, Drug and Cosmetics Act requires that drugs must be proven effective and safe before sold and manufacturers are to registered with the FDA.
Special Message to the Congress on Protecting the Consumer Interest delivered by President John F. Kennedy. Identifies four consumer rights.
White House Consumer Advisory Council established.
1964
Esther Peterson becomes the first person appointed to the post of White House Consumer Advisor.
1965
Cigarette Labeling Act requires packages to carry warning labels.
Unsafe at Any Speed published by Ralph Nader.
1966
Motor Vehicle Safety Act sets standards through creation of the National Highway Traffic Safety Administration. First task was the development of gas tank safety standards which are minimal, as evidenced by the inability of NHTSA to recall the 1973-87 Chevrolet saddle-bag gas tanks in pick-up trucks that were placed outside the frame rails, beneath the passenger door, directly in the crush zone. To this day, all of Europe imposes common bumper heights on all trucks and cars to avoid major under-ride and over-ride collisions, but the U.S. has not adopted similar standards.
Fair Packaging and Labeling Act requires products identify manufacturer, address, clearly mark quantity and servings. Statute also authorizes permits HEW and FTC to establish and define standard sizes.
Child Safety Act prohibits any chemical so dangerous that no warning can make its safe.
1967
Flammable Fabrics Act adopted and children's sleepwear in sizes 0 to 6x now covered,but the power of manufacturers kept baby blankets from the protection of this law.
Wholesome Meat Act requires inspection of meat which must meet federal standards.
1968
Truth-in-Lending Act requires lenders and credit providers to disclose the full cost of finance charges in both dollars and annual percentage rates, on installment loan and sales. Does not set interest rates.
Wholesome Poultry Products Act requires inspection of poultry which must meet federal standards.
Land Sales Disclosure Act provides safeguards against fraudulent practices in the sale of land.
Radiation Safety Act provides standards and recalls for defective electronic products.
1969
Child Protection and Toy Safety Act bans dangerous toys. Public Health Smoking Cigarette Act defines warnings for cigarettes.
1970
Credit Card Liability Act limits risk of lost or stolen cards to $50 per card; unsolicited credit cards are banned.
Poison Prevention Packaging Act established child-resistant packages, bottle tops and containers.
Clean Air Act requires EPA to establish air quality criteria and requires 90% reduction in carbon monoxide, hydrocarbons and nitrous oxide pollution by 1976.
1971
Fair Credit Reporting Act credit data collection companies to provide a synopsis of consumer credit reports to consumers, mandates correct information, and notify consumers if a credit report is being developed, so they can respond.
1972
Consumer Product Safety Commission given jurisdiction over toys, household and consumer products, excluding automobiles, food, and advertising, among other categories which are covered by other agencies.
Motor Vehicle Information and Cost Savings Act. Car bumpers must withstand a five mile-per-hour collision.
1973 Health Maintenance Organization Act provides grants for the creation of expansion of medical insurance companies.
Toxic Substances Control Act. Pre-market testing and the screening of test results prior to sale to the public becomes the law.
1974
Equal Credit Opportunity Act ends discrimination in credit on basis of sex or marital status.
Fair Credit Billing Act institutes protection for consumers from credit reporting abuse.
1975
Magnussion-Moss Warranty and Federal Trade Commission Improvements Act authorizes FTC to set requirements for written warranties, and service contracts; recognizes consumer class actions consumers for breach of warranties to consumers.
1976
Medical Device Amendments. FDA now has authority over medical devices such as pacemakers and beings monitoring of safety of these products.
1977
Fair Debt Collection Practices Act imposes limits on debt collection practices by collection agencies.
Community Development Act stops "redlining" of certain neighborhoods to allow development of low and middle level housing.
1978
Electronic Fund Transfer Act. Begins regulation of the electronic banking systems.
1980
Infant Milk Formula Act imposes nutritional requirements for infant formula.
Savings and Loan Industry Deregulation allows savings and loans to provide more than home loans and provide general banking services.
1984
Drug Price Competition and Patent Restoration Act opens the era of generic and less expensive drugs but also gives manufacturers extended patents on new drugs.
1986
Health Warnings Required on Smokeless Tobacco. Chewing tobacco banned from radio and TV advertising.
1987
Nursing Home Regulation Reform. Nursing homes standards of care if receiving Medicare and Medicaid.
1988
Financial Institutions Reform, Recovery, and Enforcement Act. Provides for rules in home mortgage lending after the federal bailout of bankrupt S&Ls.
1990
Closed-Caption Capability Requirements requires all new TV's to be equipped with a decoder to provide captioning for 10% of Americans who are hard of hearing or deaf.
Children's Television Act limits quantity, not quality of, advertising on children's television programs.
Nutrition Labeling and Education Act limits nutritional claims that can be made and health claims must be verifiable. Labels must report on calories, fat, saturated fat, cholesterol, sodium, fiber, protein and carbohydrates, per serving portion.
1991
Automobile Air Bag Requirements. Required beginning in 1996 in all passenger vehicles, trucks and minivans.
Telemarketing Regulation. Consumers can stop unsolicited advertising by being excluded from list; computerized dialers must disconnect when party hangs up..
Truth-in-Savings requires banks, thrifts and credit unions clearly explain terms and conditions of all savings accounts and interest paid. Nearly a quarter of a century after Truth-in-Lending Act as a result of industry opposition.
1992
900 Number Telephone Regulation requires these phone services to warn users of costs and terms of such calls; cannot be marketed to children under 12.
Cable TV Re-Regulation seeks to control runaway cable TV rates and increase competition in an industry dominated by local monopolies and exclusive franchises.
Nutrition Labeling and Education Act now includes amount of fat per portion.
1994
Nutrition Labeling and Education Act amended to require number of calories from fat, and total grams of carbohydrate, sodium and cholesterol.
1994
Consumer Protection Act
Truth in Lending
1995
Bicycle Protection Act Amendments.
© Richard Alexander, 1996-2007.
Richard Alexander is a specialist in personal injury litigation with 30 years in-depth experience. Emphasizing working relationships with clients has led to an exceptional record of success. He has served as a member of the Board of Governors of The State Bar of California, President of the Santa Clara County Bar Association and the Board of Governors of Consumer Attorneys of California. He is a founding member of the National Association of Consumer Advocates, and heads Alexander Hawes, LLP.
Alexander Hawes, LLP is a California law firm that specializes in personal injury, wrongful death, and financial losses caused by negligence, defective products, toxic chemicals, corporate misconduct or insurance fraud on behalf of consumers, small investors, injured workers and small businesses. In addition to individual cases the firm prosecutes class actions for large groups of individuals who have suffered financial loss as a result of corporate fraud, defective consumer products, and environmental pollution. The firm holds Martindale-Hubbell's highest rating and is recognized in the List of Preeminent Law Firms in the U. S.
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