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A key Utah lawmaker in the business-regulation arena is working on legislation that could open up to the public some or all consumer complaints filed with the state Division of Consumer Protection and now maintained as private records.
"One of the thoughts is that if a company has tens or hundreds or thousands of complaints, [disclosing] that in and of itself may be a deterrent to the company's success in ripping people off," Sen. Curt Bramble, chairman of the Senate Business and Labor Committee, said in an interview.
The Department of Commerce, which oversees the consumer-protection agency, is "working closely with" Bramble on the issue, spokeswoman Jennifer Bolton said. "We appreciate his efforts to clarify what needs to be addressed in balancing the rights of consumers and businesses in Utah."
Bolton said the department "will support any changes to current state statutes as [lawmakers] see fit."
But the agency in charge of protecting Utahns from and warning them about shady companies has in recent months insisted that consumer complaints are confidential under state law and making them public could hurt legitimate businesses.
Consumer Protection attorney Ché Arguello, during a public hearing in November, said disclosing such information would violate the principle of innocent until proven guilty.
"The fact that there may or may not be 1,000 complaints against a company is, in my opinion, with respect to public information, irrelevant," Arguello argued before the State Records Committee.
That panel sided with the division against a nonprofit consumer group, Truth in Advertising, in finding that the state did not have to disclose consumer complaints against a Provo-based multilevel-marketing company called Wake Up Now. In fact, the division has declined to say whether the company is the target of any complaints, citing a state law that says the agency cannot reveal the identity of a person or business under investigation.
Wake Up Now, profiled in a recent episode of the public-radio program "This American Life," is based on distributors recruiting friends and neighbors to build an ever-expanding chain of paying members.
It sells financial software and strategies, access to coupons, weight-loss and energy products — and appears to fit the kind of "business opportunity" and online marketing model that Bramble says he wants to regulate more closely.
"One of the areas I'm looking at, and I don't know the constitutionality yet, but one of the thoughts I had was if a business fits a certain profile — meets a critical mass of business attributes in this arena — then complaints filed with consumer protection would be public," Bramble said.
"One of the things that happens with frauds is when complaints aren't public and it takes government awhile to investigate … you could have hundreds or thousands of complaints with new victims every day," the Provo Republican said. "And yet if those complaints, when they were made, if they were public, that may actually alert someone before they put their money up."
Bramble acknowledges that trying to establish different treatment for these so-called biz-op marketers may be tricky — if not impossible.
What about simply opening up all consumer complaints to the public as some other states and the Better Business Bureau do?
Bramble says if that's the only way to require public disclosure of complaints against online marketing firms, he might be game.
"I want to look at what other states do — is Utah an outlier?" But one of the problems with consumer complaints, Bramble said, is that sometimes they can be frivolous or ambiguous.
" 'I don't like the way you comb your hair, therefore I'm going to file a consumer complaint. I don't like your attitude, therefore I'm going to file a consumer complaint,' " he said by way of example. Clearly, Bramble added, those don't deserve the level of scrutiny as that of a complaint alleging a company has lied to consumers or cheated them out of money.
Truth in Advertising believes full and quick disclosure of all consumer complaints is the best way to protect people from rip-offs and schemes.
The Connecticut-based nonprofit points to the Federal Trade Commission, which it says readily discloses consumer complaints upon submission of a Freedom of Information Act request.
That proved to be the case when Truth in Advertising turned to the FTC for complaints against Wake Up Now, providing information about the 160-plus consumer complaints it had received against the Utah company.
Fran Silverman, editor of Truth in Advertising's website and newsletter, said the FTC also recently handed over 600 consumer complaints against electronic-cigarette marketing companies, including several based in Utah.
The federal agency was "very responsive," Silverman said in an interview. "We were able to see which companies had the most complaints and the nature of the complaints. There was a pattern developing about free trials that weren't free and people with debit cards getting debited every month when they didn't OK that."
Utah's Division of Consumer Protection refused Truth in Advertising's request for similar information, even after the agency had completed enforcement action against three e-cigarette companies that admitted to hundreds of violations of state law. On appeal, the State Records Committee in mid-December ordered the division to disclose those complaints, but Silverman said her group has yet to see them.
She also noted that the records were ordered released only because the agency already had taken enforcement action against the companies. "Our feeling is it can take years before the state takes action and while it's … a wonderful step forward, it's important for consumers to have that information readily available in case the state never takes action, or it takes forever."
Truth in Advertising was the first to report that Utah regulators had quietly settled for $31,150 in payments from those three e-cigarette marketers weeks after it had issued a news release touting citations carrying fines of $1.1 million.
In a recent records request, the nonprofit asked for financial information the companies agreed to submit to the state to back up their claims they could not afford to pay steep fines.
The Division of Consumer Protection has refused to disclose those records, saying they are private.
"We don't even know if the companies ever turned anything over to the Division of Consumer Protection to prove they couldn't pay the fine," Silverman said. "They might not have turned over anything, we'll never know."
In the meantime, Truth in Advertising's website tagged the deal one of its "five worst settlements of 2014," saying, it's a case "where consumers truly got smoked."
The division has refused to discuss why it settled for 2 percent of the original fines, but did point to settlement deals in which the e-cigarette companies agreed to reimburse customers who should have been satisfied previously, to clearly spell out their cancellation and return policies, and to stop unsubstantiated advertising claims.