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

• Author: Colin Provost
• Published date: 01 December 2006
• Date: 01 December 2006
• DOI: http://doi.org/10.1177/106591290605900410
• Subject Matter: Articles

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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 prose-

cute businesses for deceptive advertising, fraud or antitrust

violations. Not only have such lawsuits become increas-

ingly 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 priori-

ties 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 entrepre-

neurs 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 settle-

ments between 1989 and 1998, I analyze the participation

rate of each state as a function of political and socioeco-

nomic factors at the state level. Previous research has indi-

cated 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 impor-

tant 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 deci-

sion 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,1help with the remainder of the work to be

done and share the settlement money (Lynch 2001; Tier-

ney 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). Final settlements usually include a large cash

settlement for the states or for state consumers, along with

mandates that the defendant(s) will not repeat the forbid-

den activity, yet they rarely include an admission of guilt

on the part of the defendant(s).

The Politics of Consumer Protection:

Explaining State Attorney General Participation

in Multi-State Lawsuits

COLIN PROVOST, NUFFIELD COLLEGE, OXFORD UNIVERSITY

In the past 20 years, state attorneys general have reinvented the enforcement of consumer protection regula-

tions. 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 attor-

neys general are elected in 43 states, the electorate’s ideology and the state’s socioeconomic culture should help

explain these discrepancies. A pooled time-series analysis of participation rates from 1989-1998 provides sup-

port for these hypotheses.

Political Research Quarterly, Vol. 59, No. 4 (December 2006): pp. 609-618

1Cases dealing with violations of state consumer protection laws are filed

in each state’s court system, even though the overall case is a joint effort

across states. The process is similar with antitrust cases, except that the

states file their lawsuits together in federal court.