Las Vegas Sun

March 29, 2024

Changes for consumers

Local consumer advocates say Gov. Jim Gibbons' planned radical reorganization of the state's consumer affairs duties should be good news for Nevadans victimized by unscrupulous business practices.

Gibbons is looking at plans to gut the Department of Business and Industry's Consumer Affairs Office and shift its consumer protection programs to other state offices to eliminate duplication of services.

But Gibbons aides were quick to stress that the firing this week of Consumer Affairs Commissioner Patricia Morse Jarman does not mean that her office will be axed or that Nevada consumers will be left out in the cold.

Brent Boynton, Gibbons' communications director, said plans call for the department to be "flattened out and make it more effective for people while saving taxpayers" money. Jarman's duties would be transferred to others in the department, he said.

Mike Dayton, Gibbons' chief of staff, said Tuesday the changes are intended to eliminate a duplication of consumer programs in Jarman's office and the state attorney general's office. Sen. Randolph Townsend, R-Reno, also is working with new Attorney General Catherine Cortez Masto toward the same end, he said.

Townsend, chairman of the Senate Commerce and Labor Committee, said the attorney general's office has more clout to impose fines or bring criminal charges against those who bilk the public.

The office of consumer protection in the attorney general's office has an annual budget of more than $4.5 million, more than three times the Business and Industry's Office of Consumer Affairs' $1.3 million annual budget.

The consumer affairs office regulates credit repair organizations, dance and martial arts studios, health clubs, sports agents, tour operators and weight loss clinics.

"This office is critically important to the consumers of Nevada," said Assemblywoman Barbara Buckley, D-Las Vegas, the incoming speaker. "My one criticism has been that it (consumer affairs) should be strengthened and improved.

"You fix it. You don't dismantle it."

While praising Jarman, Buckley said the system she worked under is disjointed, with some complaints going to Jarman's division, others to the attorney general and some to other agencies.

Consumer affairs critics predict that the changes will benefit consumers.

"Consumer affairs provides no oversight, especially for out-of-state organizations doing business in Nevada," said Michele Johnson of Consumer Credit Counseling of Southern Nevada.

Johnson's nonprofit business, which, among other things, helps people get out of credit debt, said consumer affairs has been ineffective over the years in keeping out shady for-profit counseling firms that have given her industry a black eye.

Perhaps the most glaring example, she said, was when AmeriDebt started servicing Nevada in the 1990s and persuaded consumer affairs to waive a $100,000 bond, claiming that its assessment fees to consumers were voluntary.

That was misleading, Johnson said, because consumers who refused to pay the fees would not receive assistance from AmeriDebt.

In March 2005 AmeriDebt agreed to shut down its debt management operation as part of a settlement with the Federal Trade Commission. The FTC charges included AmeriDebt misrepresented itself as a nonprofit business and deceived consumers into paying at least $170 million in hidden fees.

"If the state had forced AmeriDebt to post the $100,000 bond, at least consumers in Nevada would have gotten something," Johnson said.

She said she agrees with Buckley that the office should be strengthened to provide effective oversight for all credit counseling organizations.

Former Assemblyman Bob McCleary, now executive director of the Nevada Collision Industry Association, says the consumer affairs office has been "like a ghost" overseeing his line of work.

"We cannot say anything good or bad about consumer affairs because we cannot see that they have done anything as far as our industry is concerned," McCleary said.

McCleary, however, said one of his organization's board members also sits on the State Automotive Advisory Board, where he has knocked heads with the consumer affairs office.

"One of that board's duties is to review consumer complaints and make recommendations for improvements, but consumer affairs has refused to provide the board with actual complaints, citing privacy issues regarding those who filed the complaints," McCleary said.

Consumer affairs also fell under scrutiny in 2004 when the Better Business Bureau of Southern Nevada reported that hundreds of consumer complaints had piled up for a handful of companies, causing the bureau to ask why regulators weren't shutting down those firms.

Nearly three years later the problem still exists, said Sylvia Campbell, president and chief executive officer of the local bureau .

"I have not been asked at all to supply consumer affairs with consumer dissatisfaction reports regarding these companies," she said.

"They have the enforcement power that we do not have, yet they do not use it. They should work better with us. When we get 600 consumer complaints about one company you cannot convince me there is not something there."

Consumer affairs officials countered three years ago that businesses cannot be shut down until there is evidence that they are fraudulent.

Last Friday, Dianne Cornwall, Gibbons' deputy chief of staff, asked Jarman for her resignation.

Jarman, who lives in Las Vegas and is a longtime professional boxing judge, refused to comment but said she would be on the job - which she has held since 1994 - until Friday.

Through Business and Industry spokeswoman Amanda Penn, Jarman said her accomplishments included championing legislation that strengthened Nevada's telemarketing laws and chased many boiler-room operations out of the state, and pushing for passage of the "lemon law" that gave added protection to consumers purchasing used cars.

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