Updated: August 2007
The Evolution of Consumer Action
The History of the Organization
Following in Nader’s Footsteps
In June 1971, a few volunteers set up Consumer Action’s first office - a telephone being its most memorable element - in a nook donated by a San Francisco church. Kay Pachtner, student activist and housewife, organized the fledgling group around the consumer complaints that began to deluge Consumer Action’s first hotline. “We saw what Ralph Nader was accomplishing and we wanted to join the consumer movement,” Pachtner recalled.
The individual problems she listened to soon revealed a bigger picture: the strong taking advantage of the weak. Pachtner and crew added a mobile complaint unit in an old van and irreverent public protests to their arsenal. The feisty group found an eager partner in the press. “We had media attention from the get-go,” said Pachtner.
Consumer Action’s ability to focus equally on the little and the big picture is a key element of its evolution, staying power, and growth. Thirty years after its inception, Consumer Action’s complaint hotline is still answering individual complaints, and using that information to change the system through education, legislation, and legal action.
It was an individual complaint that brought notice to Consumer Action a short time after its founding. Aligning itself with a woman who had bought a used Jaguar that kept breaking down, Consumer Action set up a picket line in front of San Francisco’s posh British Motors. The car dealership let loose a barrage of high-priced lawyers, who hit the consumer advocates with a $6 million lawsuit. “Six million?” said Pachtner in disbelief. “We haven’t got six cents.” In the end, Consumer Action won the case, and the right of aggrieved consumers to picket businesses was established.
Groundbreaking Exposes: ‘Break the Banks’ & ‘Deceptive Packaging’
Neil Gendel joined Consumer Action full-time in 1973 after volunteering almost from its inception. Gendel, a young lawyer who had worked as a California assistant attorney general, hit on an innovative prototype that serves consumers well two decades later: surveys that compare services and prices. “Break the Banks: A Shoppers Guide to Banking Services” was published in 1973, bringing nationwide recognition “and even some money,” said Gendel. “It’s an example of how a small number of people can impact a huge industry.”
In 1974, Consumer Action took aim with a scathing indictment of the California consumer affairs department. Once again, people and politicians sat up and took notice. The expose, titled “Deceptive Packaging,” revealed that the board of this supposedly pro-consumer government agency was in fact made up of state-licensed trades people, the very group it was meant to police. “Deceptive Packaging” turned a spotlight on the agency and its $21 million budget and made it more responsive to the needs of consumers.
Consumer Action continued to publish surveys, spotlighting the price of prescription drugs, bank accounts, credit cards, gasoline, and parking garages, and exposes of the food industry and the need for nutrition labeling. Consumer Action News, the group’s newsletter, has been published regularly since the early 1970s.
United: The ‘Lemonstration’
In the mid 1970s, Consumer Action’s work expanded to include not only complaint handling, protests, and surveys, but also reform through legislation, regulations, and lawsuits. High profile protests like the 1975 “Lemonstration” - a parade of new cars that didn’t work right - brought publicity to consumer concerns. The group filed a false advertising complaint against Bank of America in 1976, resulting in a large penalty for the bank. In 1976-77, Consumer Action helped the Federal Trade Commission draft new consumer protection regulations.
Pachtner and Gendel left Consumer Action in the late 1970s. Ken McEldowney, an early staff member, returned as executive director in 1980. McEldowney, a former consumer reporter and a founder of the well-respected San Francisco group Media Alliance, ushered Consumer Action into the 1980s with a new outlook on whom the organization could help.
The 1980s: A New Constituency
In the ‘80s, Consumer Action began to realize that there were constituencies that were not being served by consumer groups. There were the growing numbers of low income residents - people who did not have access to the advice of lawyers and accountants. The senior population was increasingly the target of unscrupulous marketing tactics and scam artists. The disabled had needs that weren’t being addressed. And the face of California was changing, with new citizens arriving from all over the world. Many of the immigrants lived on low incomes, did not speak English well, and were unfamiliar with the United States, making them easy targets of economic warfare.
Recognizing a new area of advocacy and education, Consumer Action began to provide these consumers with free, easy-to-read surveys, guides, and fact sheets in English and seven other languages. By the early 1990s, Consumer Action was distributing more than one million pieces of information at no charge in California each year.
A key element of the plan to reach communities of color and persons with limited English speaking ability is Consumer Action’s multilingual employees, who handle consumer complaints in Spanish and Chinese, as well as English. Bilingual outreach staff based at Consumer Action’s Los Angeles and San Francisco offices work with an expanding network of 1,900 community-based organizations around California to educate consumers and to identify emerging problems and trends.
Deregulation’s Impact on Consumer Rights
Deregulation of the telephone and banking industries created additional problems and concerns for consumers in all walks of life. Helping consumers deal with these complex issues led Consumer Action to a new focus in the fields of banking, finance, and telecommunications.
In 1989, Consumer Action’s Telephone Information Project was set up to provide community agencies and individual consumers with free information about telecommunications services. The project was funded through the Telecommunications Education Trust established by the California Public Utilities Commission from a $16.5 million dollar penalty against Pacific Bell for marketing abuses that occurred in 1985-86.
Like other Telecommunications Education Trust grantees, Consumer Action offered its clients a basic understanding of the increasingly complex and ever-changing world of telephone services. In its first four years, the project distributed more than three million free publications.
The Telephone Information Project produced a number of fact sheets and guides to phone services, including the notable “Telephone Users Guide,” an in-depth compendium that was updated four times from 1990-1995. The 300-page guide, written by Consumer Action’s longtime staff member Michael Heffer, covers phone usage in detail, from telemarketing fraud to privacy protections to technological developments. All of the materials created by Telecommunications Education Trust grantees are housed and distributed by a consumer resource center at Consumer Action’s San Francisco office.
Cy Pres Remedies: A New Funding Source
In July 1993, Consumer Action launched an innovative Credit & Finance Project to identify and address credit and finance problems in California. The project placed its main focus on the concerns of low income, minority, immigrant, and senior consumers. The project was funded by court-assessed (cy pres) penalties against Wells Fargo Bank, for charging customers excessive credit card fees.
The emphasis of the Credit & Finance Project was on advocacy. It operated Consumer Action’s free consumer hotline and produced and distributed fact sheets and statewide pricing surveys. The Advocacy Report, a quarterly newsletter intended to inspire action to promote change, debuted in the winter of 1993.
The project also coordinated action through its Advocacy Network of community-based organizations and regular Advocacy Alerts. Members of the network are encouraged to present a unified voice for consumers on legislative and regulatory matters.
The Lead Poisoning Prevention Project & an Office in L.A.
The early 1990s brought Neil Gendel back to Consumer Action, as director of the Lead Poisoning Prevention Project, which focuses on preventing lead poisoning in children. In 1994, CA opened its Los Angeles office, directed by Cher McIntyre.
Under Ken McEldowney’s direction, Consumer Action moved beyond the barricades and into the board rooms. Whereas the group’s contact with business and industry had been totally adversarial in the ‘70s, McEldowney found that during the Reagan-Bush years it made more sense to also work with selected corporations rather than to depend just on regulatory solutions. In particular, the corporate world responded to Consumer Action’s emphasis on consumer education, and corporate-funded national educational contracts became a new source of funding for the group.
In the 1990s, Consumer Action’s focus and influence grew steadily on a national level. Its network of community-based organizations had expanded to include 400 groups outside California, distributing multilingual publications around the United States. Consumer Action’s expertise in the areas of banking, finance, and telecommunications, born during the federal deregulation of the 1980s, gave the group an authority that brought it to the table with Congress and federal government agencies such as the Federal Communications Commission and the Federal Trade Commission, as well as the national media.
Consumer Action Goes National
McEldowney, noting that Consumer Action had carved out a niche with its work with low income and bilingual consumers, made national expansion a priority in the mid 1990s. The organization opened its National Consumer Education Resource Center in 1995, under the direction of staff member Tony Pettinato. At the time of this writing in 1996, the staff was close to launching an online computer service with consumer information in English and other languages.
During its first two decades, Consumer Action achieved a balance of education and advocacy and gained a lot of attention from the public. In its second decade it also grew considerably, from a staff of four with a yearly budget of $80,000 in 1984, to a staff of 17 and a budget of $900,000 in 1996.
Models for Future Work
Two Consumer Action models - bilingual consumer education disseminated through community-based organizations, and comparative pricing surveys - have been widely imitated. By its 25th year, Consumer Action’s longtime focus on banking, finance, and telecommunications had expanded to include insurance discrimination, vehicle safety, electric deregulation, and the dangers of second-hand smoke, among many other topics of concern to consumers.
Founder Kay Pachtner, a longtime member of Consumer Action’s board of directors, said the organization outgrew her wildest dreams. “I’m so proud that Consumer Action is thriving and touching the lives of people we never had a chance to help.” And Pachtner, with missionary zeal, likes to think of all the converts Consumer Action made among former staffers: “Once you find out the difference you can make, you don’t go back to making a buck for the sake of making a buck.”