COMMENTARY

New Hampshire's Move Toward
"Consumer Federalism"

May 2002

By Donald J. Pfundstein*
for New Hampshire Business Review

The New Hampshire House and Senate recently agreed to pass House Bill 1429 — important consumer legislation that marks the most recent significant step New Hampshire has taken in support of the creation of a new "consumer federalism."

In March, I outlined how the convergence of business consolidations, productivity gains, and technology-driven consumer management systems would result in what may best be described as a new "consumer federalism." In my view, the sheer size of the federal government and the new digital-driven, business enterprises makes it impossible to respond on the local level where the "rubber meets the road." A realignment of the powers of federal and state governments is necessary to protect a dislocated consumer.

HB 1429 is a perfect example of the direction in which legislative and regulatory authorities will be headed. The new legislation was the result of a study committee which worked hard last fall in part in an effort to address a recent Supreme Court decision which clarified that attorneys were not subject to the Consumer Protection Act. The study committee was also concerned by the broad misinterpretation of the existing CPA exemption for trade and commerce regulated under other provisions of law.

The real life problem with this provision is that industries, which are virtually unregulated, are making the claim that they are not subject to the CPA. The language of the existing statute helped cause the problem.

At one point in this session's debate on HB 1429, it was noted that more than 60 different types of businesses were now claiming an exemption from the CPA by asserting they were otherwise regulated. (Frankly, I don't see how this could be a real problem under the current status of the case law.) The truth of the matter is there really isn't any duplicative, consumer protection regulation for most of these businesses. If an exemption from the CPA was allowed, an injured consumer would be left out in the cold. Frankly, this was not an acceptable result and the Legislature knew it.

Much of the debate on HB 1429 focused on which regulated industries should be exempt from the CPA because they are subject to a duplicate system of consumer protection regulation. For instance, the insurance industry is already subject to substantial provisions dealing with unfair or deceptive practices, as are the banking, utility and securities industries. Because of these duplicate, protective systems of regulation, the Legislature determined that only these industries should be exempt from the CPA, not the 60 or so other businesses artificially claiming to be subject to protective regulation similar to the CPA.

Although most of the debate focused on the manner in which to craft the exemption, the real benefit of HB 1429 is the subjection of businesses to the CPA. This makes the consumer a winner, and it's why HB 1429 is a good first step in creating a reliable "consumer federalism."

An interesting question to watch on this issue is whether HB 1429 subjected lawyers to the CPA? Will HB 1429 cause another constitutional dispute between the Legislature and Judiciary over who regulates lawyers?

*Donald J. Pfundstein is admitted in New Hampshire.

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