DATE: Sunday, March 16, 1997                TAG: 9703170193

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER 

                                            LENGTH:  377 lines

STATE'S CONSUMERS HAVE LITTLE BACKUP CRITICS OF WEAK LAWS AND LIMITED STATE AUTHORITY SAY IT'S BUYER BEWARE.

Not too long ago, John Knouse, Jennifer Espinoza and Edward Ross believed there were tough consumer laws and state agencies to protect them.

Today, they realize they were wrong.

In this state, consumer advocates say, it's buyer beware - because the Virginia Office of Consumer Affairs can't always come to the rescue.

Last year, the agency told Knouse, a Chincoteague man whose Ford Crown Victoria had a paint defect, that it couldn't help.

Likewise, it couldn't do anything for Portsmouth's Jennifer Espinoza, who said the used car she had purchased recently repeatedly broke down, including once on the New Jersey Turnpike.

And the state office informed Edward Ross, a Richmond man who says he paid but didn't get help from a job referral listing company, that he was on his own.

The problem isn't the staff at the consumer affairs office in Richmond. They're known to work long hours mediating consumers' complaints.

Rather, consumer advocates say, weak laws and limited authority make it difficult for the agency to protect consumers. They blame state legislators and a laissez-faire, pro-business attitude in the governor's administration.

There isn't ``one big foe,'' said Jean Ann Fox, vice president of the Virginia Citizens Consumer Council, a watchdog group. ``It's an overall attitude of very low priority on enforcing consumer protection law and providing consumer assistance.''

Del. Mitchell Van Yahres, a Democrat from Charlottesville, says Virginia businesses flex their muscles and successfully block legislation that would patch holes in the consumer protection safety net.

``The business lobby is very strong in Virginia, and they protect themselves very well,'' Van Yahres said. ``So we have a lot of trouble getting through consumer protection laws.''

The consumer affairs office does the best with the tools it has, agency director Robert E. Colvin said. And with recently added staff, the agency is doing a better job of educating consumers and mediating disputes, he said.

But it's not set up to be ``everyone's attorney,'' Colvin said.

``When it's not a violation of the Virginia Consumer Protection Act, the best we can do is facilitate some resolution,'' he said.

Under the act, the Office of Consumer Affairs can regulate and demand information from specific types of companies, like charities, health spas, cemeteries and membership campgrounds. It also regulates extended service contracts, travel clubs and credit services.

But this is what the law doesn't do:

If the business doesn't fall into the above categories, the consumer affairs office often can't force the company to cooperate or even respond to its letters.

If you buy a used car, the so-called lemon law doesn't apply. Statutes only force used-car dealers to post a notice on the automobile's window showing whether the car is being purchased ``as is'' or with some type of warranty.

If a business does something ``fraudulent or deceptive,'' that's against Virginia law. It's perfectly legal, however, for a company to do something ``unfair'' or ``unconscionable.''

Virginia was one of eight states last year that did not include protection against either of these business practices, according to research by the National Consumer Law Center in Boston.

``We have never been able to get the General Assembly to add `unfair trade practices' or even the word `unconscionable' into the Virginia Consumer Protection Act,'' said the Virginia Citizens Consumer Council's Fox. ``We have a very weak consumer protection law as a result of that.''

In addition, Virginia excludes more types of industries from its consumer law than most states, the National Consumer Law Center's research shows. Excluded are insurance companies, utilities and financial institutions.

Other agencies, like the State Corporation Commission, look after these areas. But they don't necessarily share the same consumer protection philosophies or the same authority in handling consumer complaints, Fox said.

With little regulatory authority, the Virginia Office of Consumer Affairs resolves most complaints through mediation. Only 18 cases were referred to the attorney general's office for possible prosecution from 1994 to 1996.

The state consumer agency resolved in consumers' favor about 4,519 complaints, or 40 percent of the 11,412 complaints closed from October 1993 to October 1996, according to a computer database analysis by The Virginian-Pilot.

The agency's attempts to help customers bombed in 10 percent of complaints - mainly because businesses balked or ignored the consumer affairs office.

In half the complaints, it's not clear whether customers got the help they wanted. In most of those complaints, the agency said it passed on information to consumers, referred the complaints to other government agencies or didn't have jurisdiction to intervene.

Indeed, consumers who live in Virginia localities with their own consumer affairs agencies - such as Norfolk and Virginia Beach - may have gotten help. But those agencies, which work closely with commonwealth's attorneys offices, are limited by the same laws and, in many cases, understaffing.

Other customers interviewed said they had been advised by the state consumer affairs office that their last resort might be the court system.

``Generally, it's do-it-yourself,'' said Stephen Swann, an Arlington attorney and member of the Virginia Citizens Consumer Council. ``And in many cases, people can't afford an attorney. So the little guy just eats it.''

Complaints about the Ford paint defects fell through the cracks.

That's what happened to John Knouse. Less than two years after Knouse purchased his '88 Crown Victoria, he noticed small patches where the blue paint had peeled off. It wasn't long before the car's paint was bare in large spots.

``It looked like a fish that had been scaled,'' said Knouse, a retired paper plant worker who lives in Chincoteague on Virginia's Eastern Shore.

Knouse says Ford Motor Co. initially agreed to pay for a paint job but then backed away, saying he had driven too many miles in the car. Knouse said he had 40,000 miles on the Crown Victoria.

At the time, it was widely known that Ford Motor Co.'s F-series trucks had paint defects that might show up years after the purchase. That same problem extended to many late-'80s Ford vehicles, said Clarence Ditlow, executive director of the Center for Auto Safety in Washington.

Ditlow's group petitioned the Federal Trade Commission and state attorneys general in 1992. As a result, Ford set up an ``owner dialog program'' in which it agreed to repaint some of the vehicles with the worst problems: the F-series trucks, Broncos and Mustangs.

In 1994, Ford dropped its repainting program, which reportedly had cost over $1.5 billion. The company has since clamped down on dealership ``walk-ins'' - customers who are still bringing their paint-peeled automobiles back to dealerships, Ditlow said.

Last year, a car salesman approached Knouse, saying other Ford owners had gotten their vehicles repainted for free. He suggested that Knouse call the Virginia Office of Consumer Affairs.

The state agency, however, told Knouse that he'd have to go to court for help, he said.

``That's when I said `forget it,' '' Knouse said. ``I don't have the money to be chasing Ford Motor Company around in court.''

Knouse's experience doesn't surprise consumer advocates, who say state and federal officials dropped the ball on the Ford paint-peeling cases.

The Office of Consumer Affairs closed at least 42 cases involving Ford paint defects. Of those cases, 14 were solved in customers' favor. In three cases, the agency noted that it failed to get Ford to cooperate.

The remaining 25 cases, like Knouse's, fell in a gray area, where the agency noted that it had passed on information, had no jurisdiction or felt there was no action needed, among other explanations.

The Office of Consumer Affairs handed over many of the Ford paint-peeling complaints to the attorney general's office in the early '90s. But there were questions over whether the Virginia Consumer Protection Act or federal laws covered the situation.

``They really let the customer down,'' Ditlow said. ``They should have gone after Ford.''

State consumer officials can't do much with complaints about used cars.

Like Knouse, Jennifer Espinoza thought she'd be protected when she locked horns with the Charlie Falk dealership in Portsmouth.

Espinoza thought a ``lemon,'' by definition, was something defective. And the Portsmouth woman believed her used car fit that category.

What she didn't know was that Virginia consumers who purchase used cars and experience problems are usually out of luck. Virginia's ``lemon laws'' apply to new cars, not used ones.

The Portsmouth woman mistakenly thought she was covered when she purchased a '90 Dodge Omni for $5,500 in December 1995, with an annual percentage rate of 24 percent. As a precaution, she bought the car with an extended warranty.

Days later, Jennifer Espinoza says she discovered the windshield wiper on the rear window didn't work. The dealership refused to make repairs until she dug in her heels, she said.

In the six months Espinoza owned the Dodge, this is some of what she claims went wrong: the radiator hose broke, the oil leaked, the antifreeze leaked, the timing belt came loose, the clutch went out and the thermostat had to be replaced.

Espinoza says she and her husband, Floyd, brought the car into the dealership's shop several times for the same problems. Each time, they paid a $50 deductible. They estimate they paid about $500 in deductibles.

``I was just fed up,'' she said. ``I was missing work, and my husband was missing work.''

Two Charlie Falk officials said they did not have knowledge of Espinoza's complaint and said they couldn't look up her records.

Espinoza complained to the Virginia Office of Consumer Affairs last June. But the agency told her she was on her own. It gave her information and closed her case a month later.

Frustrated, Espinoza took matters into her hands. She went to another dealership, put a car on hold, and then dropped the Omni off at Charlie Falk's.

``I said, `You can take this car. I don't want it.' ''

Consumers may think a business is unfair, but that doesn't make it illegal.

Edward Ross says he remembers clearly the humiliation he felt in the winter of 1995.

Out of work, he had spotted an ad for Jobs Plus Inc., a job referral listing service, in the newspaper classifieds. At the company's Richmond office, he paid about $50, with the impression that the company would set up appointments and interviews at several businesses.

But when he walked into Best Products, he was told that the retailer didn't have job openings.

``They didn't even know I was coming,'' said Ross, a Richmond resident. ``It was embarrassing.''

Norfolk-based Jobs Plus, which has since closed the Richmond office, isn't doing anything illegal, consumer affairs officials say. The company is a job referral listing service, not an employment agency. It doesn't have to guarantee interviews, appointments or even jobs.

Karla O'Leary, supervisor at the Norfolk Jobs Plus, says customers are told what to expect. And she sees no reason for their complaints.

``(Customers) don't get the wrong idea,'' she said. ``We're not selling jobs here.''

At least 14 complaints have been filed against Jobs Plus, most involving the now-closed Richmond office, according to the consumer affairs database.

Ross' complaint, filed in February 1995, was closed six months later with a note that he had been ``given information.''

``They wrote a letter saying they had checked into it but couldn't help us,'' Ross said. ``They said, `You got stuck.' They didn't help us out. So I just let it go.''

Can Virginia plug the gaps in consumer protection?

Customers are mistaken if they think the Virginia Office of Consumer Affairs is the answer to their problems. The state agency has limited authority, and to complicate matters, its funding has seesawed over the years.

``Unfortunately, consumer protection is often seen as something expendable by legislators or others who hold the purse strings,'' said Susan Grant of the National Consumers League in Washington.

Over the years, several attempts have been made to strengthen the state's Consumer Protection Act, but with limited success.

For example, a 1995 General Assembly bill would have allowed the state agency to investigate most kinds of businesses - not just the charities and other specialty areas. It also would have allowed the consumer affairs office, through the commissioner of the Department of Agriculture and Consumer Services, to demand documents and issue subpoenas when investigating these complaints.

When passed, the bill strengthened penalties against businesses, but only if consumers succeeded in court in their own lawsuits. Provisions giving the state agency more teeth were dropped after loud protests from the Virginia Retail Merchants Association and a lukewarm reception from Gov. George F. Allen's administration.

Bill Coiner, former president of the retail group, said businesses didn't like the idea of a state agency that could demand information ``just because a customer complains.''

``It sort of puts you in the position of having to prove you're innocent before you've even been charged,'' Coiner said. ``We felt it would have been an added burden on the business community.''

Coiner said he sees no reason why the consumer affairs agency needs broad investigative powers because the attorney general's office has that authority.

Betty Sulzbach, the former director of the state's consumer affairs office, knew that retailers were concerned. And she wanted an opportunity to address their fears. But she said her boss, J. Carlton Courter III, the commissioner of the Department of Agriculture and Consumer Services, wouldn't allow her to support the bill.

Courter said the governor's office preferred that department heads only speak about the bills.

He added that he didn't want more authority given to the consumer affairs office because it didn't have enough staff at the time.

Consumer advocates are quick to point out that Courter never fought for more consumer funding, even when the agency's staff had dwindled to the point where there were no investigators to handle general complaints last year.

After customers took their complaints to state lawmakers, the 1996 General Assembly restored funding for 10 positions and for the agency's toll-free hot line.

The agency now has about 25 full-time employees, near its all-time peak. But state legislators who helped push for funding acknowledge that there are no guarantees that the agency will always be well-staffed. Indeed, the agency's funding and staffing have seesawed over the years as priorities have changed.

Over the years, the Virginia Citizens Consumer Council has tried several times to widen the scope of state law by making ``unfair'' or ``unconscionable'' practices illegal. But not enough legislators have been convinced.

Likewise, state lawmakers haven't supported attempts to strengthen laws regulating used cars.

Under current law, if a vehicle is sold ``as is,'' the dealer is not responsible for anything that happens after it leaves the lot, even if it conks out two seconds later.

Several states offer stronger regulations. For example, Massachusetts has a Lemon Aid Law that gives a consumer the right to return a used car if it fails inspection and the cost of the repairs exceeds 10 percent of the vehicle's cost.

Massachusetts also has a used car warranty law. For vehicles that have less than 40,000 miles, dealers must offer a 90-day or 3,750-mile warranty. For autos with 40,000-80,000 miles, there's a 60-day or 2,500-mile protection; and with 80,000-125,000 miles, a 30-day or 1,250-mile warranty.

In Virginia, consumer advocates have asked for some of the same protections. But they've been denied.

Courter, commissioner of the state agriculture department, says it would be very difficult to craft a used-car lemon law.

``You don't know when you're almost at the end of a car's life,'' he said. ``Some things just wear out.''

Will the agency's recently appointed leader take a new direction?

Consumer advocates are watching the Office of Consumer Affairs to see if its new leader, Robert Colvin, will be more activist than administrator.

But so far, they aren't sure what to expect.

Consumer advocates and state officials say Colvin is a nice guy who works hard and has a sense of humor. But they wonder whether the politically savvy leader, whose background is in law enforcement, will make waves.

For now, Colvin isn't saying.

He says he's not sure whether the office should be moved into the attorney general's office or remain in the agriculture department, where consumer advocates say it hasn't received enough attention.

Some Virginia localities have experimented with small claims courts, which consumer advocates say would help the state's residents in complaints involving smaller sums of money.

Colvin says small claims courts sound nice. But asked whether Virginia localities should be required to have them, he responds carefully: ``My staff tells me that people like them.''

Would including ``unfair trade practices'' in Virginia law help consumers?

``I have no comment on that at this time.''

Colvin is willing to talk about the changes now taking place inside the agency.

Under Colvin, the Office of Consumer Affairs will expand its ``buyer-beware'' education. It has a new ``prevention specialist'' who will work with volunteers to reach senior citizens and neighborhood groups, he said.

In addition, the state agency has set up a three-person panel to help mediate complaints that aren't a direct violation of the Consumer Protection Act, Colvin said.

Even with these efforts, the agency still will not be able to be everyone's savior, he said. There are complaints that fall in a gray area - not fair, but not illegal. There are others that are somewhat off the wall, like the woman who wanted the agency to force an apology from a business.

And there are more complaints where the Office of Consumer Affairs simply does not have the power to meddle.

``Some people think we have a sledgehammer,'' Colvin said. ``Really, what the agency has is a statute.'' ILLUSTRATION: Color photo

VICK CRONIS/The Virginian-Pilot

John Knouse, a Chincoteague man whose Ford Crown Victoria had a

paint defect, was told by the Office of Consumer Affairs to seek

help from the courts when Ford reneged on a promise to repaint his

car.

Graphics

LIMITATIONS

The state's Office of Consumer Affairs is well-staffed, for now, but

Virginia law does not give it much authority in some areas. Watchdog

groups say legislators and the Allen administration favor business.

VP

RESULTS

SOURCE: Virginia Office of Consumer Affairs

[For complete graphic, please see microfilm]

WHOM TO CALL

Virginia Office of Consumer Affairs

Description: A clearinghouse for consumer complaints. The office

screens complaints for violations, mediates disputes and enforces

some regulations. If you're not sure which agency to contact, call

this one first.

Address: 1100 Bank Street, Suite 100, Richmond, VA 23219

Telephone: (800) 552-9963

(toll-free)

Norfolk Consumer Affairs Division

Description: Mediates complaints and investigates possible

violations of consumer protection law. Only people who live in

Norfolk or who are complaining about Norfolk businesses should call

this agency.

Address: 800 E. City Hall Ave., Room 501, Norfolk, VA 23510

Telephone: (757) 664-4888

Virginia Beach Consumer Affairs Division

Description: Mediates complaints and investigates possible

violations of consumer protection law. Only people who live in

Virginia Beach or who are complaining about Virginia Beach

businesses should call this agency.

Address: 2305 Judicial Blvd., Building 10-B, Virginia Beach, VA

23456-9050

Telephone: (757) 426-5836

Better Business Bureau

Description: Offers pre-purchase information and complaint

reports on local businesses.

Address: 586 Virginian Drive, Norfolk, VA 23505

Telephone: (757) 531-1300

Motor Vehicle Dealer Board

Description: Enforces the Motor Vehicle Dealer Licensing Act and

auto advertising regulations. It handles complaints about licensed

automobile dealerships.

Address: 2201 W. Broad St., Suite 104, Richmond, VA 23220

Phone: (804) 367-1100

Department of Motor Vehicles

Description: Investigates complaints about motor vehicle titles

and odometer tampering.

Address: 2300 W. Broad St., Richmond, VA 23220

Phone: (804) 367-0538

Federal Trade Commission

Description: Enforces laws against deceptive and unfair trade

practices, credit laws, telemarketing fraud and other federal

regulations.

Address: 6th and Pennsylvania Ave. NW, Washington, D.C. 20580

Phone: Written complaints only

Source: Virginia Citizens Consumer Council Complaint Guide,

November 1996 KEYWORDS: CONSUMER PROTECTION VIRGINIA

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