It’s hard enough running a small business, and it’s harder in Rhode Island, with its relatively high taxes and high benefits and utilities costs, the Small Business & Entrepreneurship Council, a national advocacy and research group, determined last fall.
The council ranked Rhode Island 48th in its 2006 Small Business Survival Index, ahead only of California, New Jersey and the District of Columbia.
Add tough – and sometimes obscure – consumer protection laws, and the challenges are even greater. Which is why the new chief of the R.I. attorney general’s Consumer Protection Unit, Parisa Beers, is reaching out to businesses, promoting her unit as a resource and an ally.
Beers, who started Feb. 1, oversees investigators in the civil division who fight against consumer fraud and violations of consumer protection laws. The unit also educates businesses about the law, both to help consumers and to keep the businesses out of trouble.
“We try to be proactive and alert businesses about new laws and scams that affect small businesses,” said Jim Lee, chief of the civil division. Among other things, the Consumer Protection Unit sends letters to chambers of commerce and issues news alerts.
Still, it’s easy for businesses to miss legal changes that affect them.
When a new state law took effect that made it illegal to impose expiration dates on gift cards, or to charge dormancy or maintenance fees, for example, the unit got plenty of calls from consumers about businesses that weren’t complying with the law.
“Many times, small business owners didn’t even know what the customer was talking about, because they hadn’t heard about the law,” Lee said.
Other times, there are questions that require clarification, and the unit gets involved in trying to sort through the legal muddle. Last year, for example, the attorney general’s office sought clarification from the R.I. Supreme Court on whether a state law prohibiting Sunday auto sales in Rhode Island was invalidated by another law that said retail establishments could be open on any day of the year. The Supreme Court ruled that the Sunday auto sales ban was valid and constitutional.
Even when it’s acting as an enforcer of state consumer protection laws, Beers’ unit also protects businesses, said Lee, because it nips unwarranted complaints in the bud.
“We get over 20,000 calls a year from consumers, most of them complaining about a business,” Lee said. “The calls we get could be going to the actual business, so we are saving business owners time and money by handling these complaints.”
Most complaints involve automobile sales, telemarketing scams, banking/ lending issues, home improvement projects gone awry, landlord-tenant disputes and debt-collection practices, Lee said. The vast majority are not legally actionable.
“We stop about 95 percent of calls from escalating into formal complaints,” Lee said.
For those calls that do appear to warrant action, the Consumer Protection Unit takes a written complaint on a form that includes the complainant’s personal information, the business in question, the allegation, whether the business has been contacted about the issue, and how the consumer would like to resolve the issue.
The complaints that merit investigations usually involve closed businesses, retailer disputes, telecommunications companies and medical contracts, according to the attorney general’s office. And even those are, to a great extent, resolved without court action.
The Consumer Protection Unit staff acts as a mediator, Lee said, to try to prevent conflicts from escalating. When mediation isn’t enough, however, the attorney general’s office will act as a legal advocate for the consumer.
In one recent case, for example, the unit helped Rhode Island small businesses seeking protection from costly payments to a New Jersey-based telecommunications vendor that had allegedly swindled business owners across the country.
Until it was forced into bankruptcy by its creditors in July 2004, NorVergence was a third-party telecommunications service vendor that offered telephone, wireless phone and Internet service for a flat fee, promising savings of about 30 percent.
In fact, NorVergence had to pay for those services from other providers, which it had stopped doing before going into bankruptcy.
When NorVergence was forced into bankruptcy, its customers were left without service, but the companies with which they had financed the equipment still wanted their payments under long-term contracts.
As part of a multi-state settlement this month, two Rhode Island businesses will get about $8,700 in refunds, and six others will be spared $61,500 in payments.
To learn more about the Consumer Protection Unit, catch up on recent notices and see warnings about scams, go to www.riag.ri.gov/civil/ and click on Consumer Protection.
