Academic journal article Political Research Quarterly

The Politics of Consumer Protection: Explaining State Attorney General Participation in Multi-State Lawsuits

Academic journal article Political Research Quarterly

The Politics of Consumer Protection: Explaining State Attorney General Participation in Multi-State Lawsuits

Article excerpt

In the past 20 years, state attorneys general have reinvented the enforcement of consumer protection regulations. Prosecuting businesses through multi-state lawsuits has the effect of enforcing consumer protection laws at the national level. The participation of states in these lawsuits varies quite dramatically across states, yet little research has been done to explain these differences in consumer protection enforcement. Because state attorneys general are elected in 43 states, the electorates ideology and the states socioeconomic culture should help explain these discrepancies. A pooled time-series analysis of participation rates from 1989-1998 provides support for these hypotheses.

In regulatory politics, it is generally accepted that changes in the American federal regulatory structure during the Reagan Administration led to stronger enforcement at the state level and greater activism on the part of state attorneys general (SAGs or AGs). This greater activism has manifested itself most notably in multi-state consumer protection (MSCP) lawsuits, employed to prosecute businesses for deceptive advertising, fraud or antitrust violations. Not only have such lawsuits become increasingly visible through the media, but they represent one of the most important policy tools of SAGs, as the efforts of multiple states effectively serve to enforce regulatory policy at the national level. Other multi-state activities, such as the writing of letters to Congress or the President to press for the enforcement or enactment of particular legislation, have also become common, but these do not have the enforcing effect that lawsuits have. However, participation varies substantially across states in this type of litigation as the substantial workload in each AG office requires priorities to be set and choices to be made about how to set the legal policy agenda. How do SAGs make policy and why are some more active than others in this type of litigation? Despite the abundance of anecdotal stories about entrepreneurs in the news media, such as New York AG Eliot Spitzer, very few attempts have been made to document systematically the policymaking patterns of these public lawyers. In this article, using data on all MSCP case settlements between 1989 and 1998,1 analyze the participation rate of each state as a function of political and socioeconomic factors at the state level. Previous research has indicated that socioeconomic factors, such as family income and urbanism, correlate with strong consumer protection regulations, but because 43 of the 50 SAGs are elected, states with liberal electorates should lead the way in filing multi-state lawsuits.

MULTI-STATE LITIGATION

The Process

MSCP litigation has arguably become the most important multi-state activity of SAGs as it is now the primary method by which states deal with deceptive advertising, antitrust violations, and consumer fraud. It is difficult to say precisely how MSCP cases begin each time, but the power to investigate has a tremendous impact on the decision to follow a case to the end. When investigating the possibility of a crime, most SAGs have the authority to issue civil investigative demands (CIDs) "to obtain both documentary and testamentary evidence from anyone who may have information relevant to the investigation" (Ross 1990: 208). CIDs essentially amount to subpoenas and they allow SAGs to gather all the information they need before deciding whether a lawsuit should be filed or not. In most multi-state cases, one state or a small group of states does much of the early investigative work and then once a lawsuit is filed, other states will file lawsuits in their own states,1 help with the remainder of the work to be done and share the settlement money (Lynch 2001; Tierney 2002). Rather than spend a protracted length of time in court, most defendants choose to settle cases quickly. In fact, it is not uncommon for some businesses to ask that all or most states be included in the settlement to avoid the specter of future litigation from other states (Greenblatt 2003: 56). …

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