The Foundation for Taxpayer and Consumer Rights has decided to re-brand itself as a "consumer watchdog." Will a simple name change help shore up the eroding reputation of this "consumer group?"
Few days pass without someone from FTCR pontificating in a newspaper story or TV report. Agents of this organization often are quoted – without explanation of their credentials – about auto, fire or health insurance, gasoline pricing, stem cell research, or just about any public policy debate on the FTCR's mind.
In the voracious 24-hour news cycle, the group's name alone is presumed to be evidence of its righteousness. For news reporters on a deadline, FTCR has cleverly made itself into the quick go-to source for "independent" analysis on politics and policy.
But such a media darling by any other name will still stink.
Behind the pithy quotes from FTCR's leaders lies an organization with too much to hide and too many faults to be taken seriously anymore. It has survived by quietly pocketing millions of dollars in fees stemming from an initiative it wrote and sponsored nearly two decades ago. Along the way, it has engaged in hypocritical and speculative stock trading, enjoyed the secret patronage of wealthy trial donors, and either cozied up to or bullied politicians. All of this came despite operating under IRS rules as a "public-benefit" charity.
Uncovering the real story and motives behind FTCR is critical as this group now embarks on a high-stakes and potentially dangerous health care reform initiative for the California ballot. Instead of just opinion-mongering, FTCR is attempting once again to manipulate public policy through the California ballot box.
Every California consumer should remember what happened one of the last times FTCR meddled in the initiative process with Proposition 103 – FTCR made a handsome income for itself.
This isn't the first time they've found it necessary to change their name. The group first started as the "Network Project" and then morphed into the more stolid-sounding Foundation for Taxpayer and Consumer Rights. That should have been the first clue. FTCR's founders have spawned a variety of lobbying campaigns, Web sites and ancillary groups, and an aggressive media program that includes close relationships with the state's most influential political reporters and editors.
One of its most lucrative endeavors has been the Proposition 103 Enforcement Project, which emerged out of the narrowly approved initiative that was supposed to cut car insurance rates and regulate future increases. FTCR has championed Proposition 103 as one of its greatest successes, even though the California Supreme Court tossed out a promised 20 percent rate reduction for consumers.
Something, however, did survive from Proposition 103: state regulations that allow FTCR to collect hundreds of thousands of dollars in fees for challenging insurance premium increases – and even decreases! That's right: The group that wrote Proposition 103 included in fine print a provision that provides a healthy income for "monitoring" the law it crafted.
State records show that three groups linked to FTCR founder Harvey Rosenfield have collected millions of dollars in so-called "intervener" fees since Proposition 103 was enacted. The vast majority of intervener fees paid out in California between 1995 and 2005 were collected by a trio of groups all tied to Rosenfield – Voter Revolt, the Proposition 103 Enforcement Project, and FTCR itself – according to California Department of Insurance records.
How much did they make for their services? The Department of Insurance once rejected Rosenfield's request for a $295-an-hour fee and settled on paying his group a mere $225 an hour. That's money that insurance companies have to pay from your premium dollars.
Now, the group is crafting a new ballot initiative scheme to regulate health insurance rates. That initiative may have some merit. But rest assured that it will include a provision designed to allow the group to collect those lucrative intervener fees just like Proposition 103 when the fine print appears in a few months.
There is more to FTCR than just profiting off dubious "consumer" initiatives. Although it claims to be a public-benefit charity, FTCR frequently take sides in political races through its proxies, thinly researched "reports" and public statements.
The group is a virtual spinning wheel of hypocrisy. FTCR has for several years maintained Web sites dedicated to smearing elected officials. Its latest hatchet job was on Assembly Speaker Fabian Núñez; FTCR made several money-raising appeals based on its attacks.
Of course, the public has no idea what is really motivating FTCR because its agents refuse to disclose their financial backers. Their reasons for hiding the facts are insulting to the average Californian's intelligence.
FTCR declined to release a list of donors on its Web site by ludicrously equating their work to the civil rights movement in the South. Its refusal to list details about its financial backers is particularly galling since FTCR spends a lot of time lambasting politicians for alleged corruption surrounding their own political donations.
One source of income is clear, thanks to some available public disclosure forms. Following the disastrous 1994 Northridge earthquake, founder Rosenfield extracted $5 million in a consumer-protection settlement with Allstate Insurance. The money was placed in a new group he controls, the Consumer Education Foundation, which was supposed to prevent the kinds of insurance disasters that followed the Northridge quake.
But nearly a decade after the group was formed, its biggest accomplishment appears to be paying Rosenfield a $100,000 salary and writing a few grant checks … including to Rosenfield's own FTCR, to fund its operations. One wonders what the judge in the Allstate settlement would think about this cozy relationship, let alone why Northridge consumers have yet to see much benefit from the $5 million that was paid out supposedly for the public good.
It gets even more absurd.
Rosenfield's Consumer Education Foundation invested some of its Northridge windfall in Enron stock – the Texas company that bilked California consumers out of billions of dollars. This laughable investment, which the CEF was forced to reveal in disclosure statements, is almost too incredible to believe. The "consumer" foundation put its money in one of the biggest consumer rip-off companies in U.S. history.
Enron wasn't the only hypocritical stock purchase made by the Rosenfield's Consumer Education Foundation. The group purchased stock in Abbott Labs, Amgen, Merck, Pfizer, Idec Pharmaceuticals, Johnson and Johnson, and Proctor and Gamble. Meanwhile, FTCR would soon get busy lambasting politicians for accepting campaign donations from these same companies. And while FTCR has lashed out at automobile and chemical companies, the "consumer" foundation has invested in Clorox, DuPont, General Motors, Ford Motors, and Toyota Motor Credit.
Fairly soon, the scam artists formerly known as FTCR will unveil their new ballot measure on health insurance rate regulation. Health care is one of the most important issues of the decade, yet this is the very same group that teamed with another one of its major donors, the radical leadership of the California Nurses Association, to help defeat health care reform pushed by Democrats in the legislature this year.
California voters will be hearing and learning more about FTCR. They will ask themselves whether they should place their trust in the hands of such a secretive gr
oup with self-serving motives. And it doesn't matter what they're calling themselves this time around.