Bad drivers and a weak business climate aren’t the only measurements by which Rhode Island ranks poorly compared with other states.
For nearly two decades, the Ocean State appeared at the back of the pack nationwide when it came to state consumer-protection laws, dubbed one of the “terrible two” in a 2018 report by the National Consumer Law Center.
Not anymore. A state law passed this year has at last corrected what many in the industry saw as a severe weakness in consumer protection by at last empowering Rhode Island’s attorney general to pursue people or companies that rip off or deceive consumers.
“It was really more about what it prevented than what it allowed,” R.I. Attorney General Peter F. Neronha said of the problems with the previously limited protections under the Deceptive Trade Practices Act.
The 1986 law outlines a broad range of deceptive or unfair business practices under which the R.I. Office of the Attorney General can bring charges on behalf of consumers. However, the law was hamstrung by a 2004 R.I. Supreme Court case in which the court ruled that the state’s prosecutorial power does not apply to any company that is regulated by another group or agency. That means everyone from banks to car dealers to insurance companies got a free pass since they are subject to other forms of state or federal regulation.
“The only thing it might apply to is Molly Maid,” said Christopher M. Lefebvre, a Pawtucket attorney who offers consumer-protection services, referring to the law as interpreted by the state courts. “And most people who clean houses are not the ones committing consumer fraud.”
Legislation passed this year essentially sidesteps that court ruling by clarifying that the attorney general can bring charges against any company that violates the Deceptive Trade Practices Act, regardless of whether it is otherwise regulated. It also gives the attorney general power to fine companies up to $10,000 per violation. Previously, Rhode Island was the only state in the country without financial penalties for companies that violated its law, according to the National Consumer Law Center.
Neronha called the bill a win-win for consumers and businesses alike. Not only does it give state residents protections against businesses that take advantage of them, it protects companies that are not violating the law, he said.
‘What this does is level the playing field.’
PETER F. NERONHA, R.I. attorney general
“If you’re doing things the wrong way, you get an advantage over businesses that are doing things right,” Neronha said of the previous version of the law. “What this does is level the playing field.”
The American Property Casualty Insurance Association initially opposed the legislation, fearing the potential for conflicting regulations from the R.I. Department of Business Regulation and the attorney general’s office, said Frank O’Brien, the association’s vice president of state government relations. But the group has since reversed its stance after reassurances from Neronha’s office, O’Brien said.
Still, not everyone was happy with the new law. To Lefebvre, the changes were meaningless, since private attorneys such as himself still cannot bring consumer-protection charges against companies that are regulated by other groups.
“It’s nice for the attorney general to have powers, but the attorney general is not going to be dealing with every single situation where a consumer feels they’ve been ripped off,” he said.
Smaller-dollar cases and civil matters are unlikely to get the same attention from the state prosecutor, Lefebvre said.
Neronha, however, countered that it was these small civil lawsuits in which consumers were most in need of help from his office, since private attorneys might be unwilling to take the case.
Since the pandemic began, his office has seen the number of monthly calls for consumer-protection complaints skyrocket from around 600 to 1,000, in part because of a fresh wave of fraudsters seeking to prey on consumers.
Lefebvre, too, has received more calls from potential clients with consumer-protection cases. Unable to go after bad actors under the Deceptive Trade Practices Act, he has managed to find workarounds in his practice – suing businesses for breach of contract or general fraud or based on federal protections such as the Truth in Lending Act or Real Estate Settlement Procedure Act.
But these alternatives don’t always work, and the fact that Rhode Island law fails to offer the same protections for private attorneys as other states, including neighboring Massachusetts, is a problem, Lefebvre said.
Rep. Charlene M. Lima, D-Cranston, who sponsored the House bill also hoped to expand upon the protections added this year, including letting those other than the attorney general to sue under the Deceptive Trade Practices Act.
She has pushed for similar legislation without success for years, dating back to when former Republican Gov. Donald L. Carcieri was in office.
“I don’t understand the resistance,” she said. “Are they asking for the authority to deceive people? It doesn’t make sense.”
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.
