Attorney general proposed to run some of consumer office

The state's consumer protection office has been in the Virginia Department of Agriculture and Consumer Services for 42 years.

For at least a decade, Virginia legislators have questioned whether it should stay there.

Some legislative proposals have suggested moving consumer protection to the attorney general's office. Others have proposed turning it into an independent department. None of the bills has passed.

Now, Gov. Bob McDonnell is adding his voice to the chorus. In his "government reform initiatives" for the coming legislative session, he suggests the attorney general should take over some of the operations of the state Office of Consumer Affairs.

The office takes Virginians' complaints about business practices and investigates them. If a business has broken the law, the attorney general's office generally would handle any legal action.

"Having two separate agencies managing consumer protection leads to a disjointed system that is confusing for citizens of the commonwealth," McDonnell wrote in a report submitted to the General Assembly. Merging the two offices "will lead to a more unified and efficient consumer protection operation for Virginia and better protect Virginia consumers."

No one has suggested that the current setup isn't working, said Matthew Lohr, former state delegate and commissioner of the Department of Agriculture, who was appointed by McDonnell.

The governor believes that a different arrangement could work better, or at least more cost-effectively, Lohr said. In most states, consumer protection is the attorney general's responsibility.

As a state delegate in 2010, Lohr submitted a bill to transfer some operations of the Office of Consumer Affairs to the attorney general's office. He sponsored the legislation at the behest of Attorney General Ken Cuccinelli, who wanted "to streamline the process and try to make state government more efficient," Lohr said, and provide "one-stop shopping" for consumers.

Lohr's bill passed the House unanimously. In the Senate, it never even came up for discussion in the Committee on General Laws and Technology, he said.

McDonnell's proposal requires legislation, but he hasn't yet identified a patron to sponsor it.

The Office of Consumer Affairs has a budget of about $2.1 million and a staff of 20, plus 12 vacancies.

The governor's proposal would move eight employees and $486,000 - to handle consumer counseling, complaint intake and referral, investigation and dispute resolution services, wrote Jeff Caldwell, the governor's spokesman, in an email.

Other parts of the Office of Consumer Affairs - those that oversee price gouging complaints and regulatory areas such as charity fundraising and fitness clubs - would remain in the agriculture department.

Irene Leech, president of the Virginia Citizens Consumer Council and a professor of consumer affairs at Virginia Tech, said she fears that the governor's proposal would end up reducing the staff and resources devoted to helping consumers, when the state needs to bolster that work.

"My concern is it's being done as a cost-saving thing," Leech said. "We already have a very small office compared with other states."

The Office of Consumer Affairs collects licensing fees and penalties from the entities it oversees, such as fundraisers. If consumer protection is moved away from such regulation, Leech wondered whether it would continue to get adequate funding.

Money that comes into the agriculture department from the regulatory operations can be transferred to the attorney general's office for consumer affairs, Caldwell wrote. "The intent is to make this a cost-neutral undertaking in a manner that does not degrade the quality of services provided to consumers and the regulated industries," he said.

Thomas Domonoske, a Harrisonburg attorney who specializes in consumer cases, said the location of the Office of Consumer Affairs doesn't matter as much as the allocation of resources toward policing business practices that harm consumers.

The attorney general's office has done little, for example, to combat improper foreclosure actions by some banks and processing firms, he said.

"They don't need the reorganization to act on those issues," Domonoske said.

The move isn't about spending on consumer protection, Caldwell said.

"This proposal is more about properly aligning the functions of government," he wrote in an email. McDonnell "saw that consumer protection more closely aligned with the attorney general's office rather than the Department of Agriculture and Consumer Services."

In 1970, the General Assembly created the Office of Consumer Affairs and put it under what was then the Virginia Department of Agriculture and Commerce.

The department already had a consumer protection role in its Office of Weights and Measures, which inspects and licenses equipment used in transactions, such as gas pumps, to ensure integrity between buyers and sellers.

In 2002, then-Gov. Mark Warner created the Commission on Efficiency and Effectiveness, known as the Wilder Commission, to look at ways to streamline state government.

Among its conclusions, it recommended removing the Office of Consumer Affairs from the agriculture department but didn't say where it should go.

In 2005, then-Sen. Jay O'Brien sponsored a bill that would have established a standalone Department of Consumer Affairs.

O'Brien, a Republican from Clifton, said at the time that Virginia consumers would see greater benefit from a more visible, independent agency.

"Where you place the agency that performs this service for the citizens of Virginia is important," he said then.

The Senate unanimously passed his proposal, but it died in the House Appropriations Committee.

Three years later, Del. Bob Marshall, R-Manassas, submitted similar legislation for a separate consumer agency. Marshall said he wanted to push forward some of the Wilder Commission's ideas and, at minimum, bring the Consumer Affairs question up for discussion.

Marshall's bill never left the House Committee on General Laws.

With McDonnell behind it, the proposal might have the momentum it needs, Marshall said. "Now that this governor is supporting it, it stands a much better chance of passing."

Carolyn Shapiro, (757) 446-2270, carolyn.shapiro@pilotonline.com