By Trudy Lieberman
Trudy Lieberman joined the Detroit Free Press in 1968 as one of the nation’s first full-time consumer writers. She had a long career at Consumer Reports where she specialized in economic issues, healthcare financing and insurance. She is a long-time contributing editor to the Columbia Journalism Review and blogs on health care and the coverage of health for CJR.org. She has won many honors and awards — including two National Magazine Awards and three Fulbright Scholar Awards — and is a past president of the Association of Health Care Journalists.
In February 2013, 60 Minutes, one of the first and now one of the last outposts of good consumer reporting, aired a fine segment on difficulties encountered by millions of Americans in expunging incorrect information from their credit files.
One in five Americans has wrong information on their records, and when they demand corrections, the three behemoths that rule the credit-reporting industry don’t make them, jeopardizing consumers’ ability to get jobs, insurance, medical care, and other goods and services. One customer service rep located in Chile told 60 Minutes that if he investigated a complaint, it was usually resolved in favor of the creditor. “The creditor was always right,” he said.
It wasn’t supposed to be that way. The Fair Credit Reporting Act passed in 1970 during the heyday of consumer legislation gave consumers the right to know what was in their files and to dispute incomplete or inaccurate information. The law required credit-reporting agencies to correct or delete inaccurate, incomplete or unverifiable information and prohibited them from reporting negative or outdated stuff about consumers’ bill-paying habits. Those were important protections as this new thing called credit cards was emerging as the currency of choice.
But 43 years later 60 Minutes found that consumers were being harmed just as they were before. “There is no doubt in my mind that they (credit-reporting agencies) are breaking the law,” observed Ohio Attorney General Mike DeWine. “The problem is not that they make mistakes. It’s they won’t fix the mistakes,”
The 60 Minutes piece is emblematic of the rise and fall of consumer reporting over the last 50 years and parallels the emasculation of consumer legislation like the Fair Credit Reporting Act, which was intended to make the relationship between buyers and sellers more equal — perhaps even tipping the balance in favor of consumers. Today, though, business has the upper hand. Most of the media pay little attention to credit reporting agencies, consumer credit, food safety laws, debt collectors, and many other topics that were once staples of consumer reporters who followed the lead of a young lawyer named Ralph Nader.
Nader’s 1965 book, Unsafe at Any Speed, and his bold attack on the nation’s auto companies made great copy, transforming him into something of a folk hero and prompting newspaper editors to hire journalists to dig into unsavory business practices in their own communities. In 1970, Sales Management magazine reported “at least 50 dailies have assigned reporters to full-time to consumer issues and an estimated 500 now carry one of about 10 syndicated columnists who either muckrake the marketplace or tell readers how to stretch the family finances.”
Another 25 papers ran action line columns to help readers sort through a burgeoning, confusing, and bewildering marketplace full of new buying choices. No longer was it easy to select a simple electric mixer; shoppers could now choose among blenders with four, eight, or 12 buttons. Along with myriad choices came consumer rip-offs like lifetime guarantees for small appliances that lasted only as long as the machine worked, unsafe products like baby cribs that killed children when their heads got caught in the slats, and high pressure salesmen who conned consumers into onerous credit contracts that gave them no recourse when the transaction turned sour.
The Detroit Free Press where I worked as one of those 50 consumer writers recorded a total of 400,000 letters and phone calls in one year. According to Sales Management , the readership of the Free Press’s action line column ranged from 71 percent among male teenagers to 82 percent among adult women. Despite their popularity and reader appeal, action line columns have disappeared, and their replacements — he TV reporters like WCBS-TV’s Arnold Diaz and his Shame on You segments which spotlighted questionable business practices — are rare.
The political, economic, and social upheavals of the 1960s were fertile ground for the nation’s third consumer movement. In the first decade of the 20th century, exposes by muckrakers such as Upton Sinclair and Ida M. Tarbell sparked passage of some of the country’s first laws regulating food and drugs. In the 1940s came the second consumer wave when crusading journalists such as Sidney Margolis exposed marketplace deception, pushed for price controls, and told shoppers how to get the most from their wartime dollars.
By the 1960s it became apparent that the states and the federal government had to take a tougher role policing the fast-changing post-war marketplace. Large regional newspapers like the Free Press, its rival the Detroit News , the Detroit News , the Minneapolis Star , the Cleveland Plain Dealer , the Chicago Sun-Times , Newsday , the Miami Herald , and the Charlotte Observer considered local business practices legitimate subject matter for their young writers. So did TV stations. In 1970 Straus Editor’s Report noted, “Editors Jump Off The Bland Wagon To Offer Earthy Consumer News.” CBS had assigned a full-time producer to its morning TV network news casts to develop consumer angles, and WTTG-TV in Washington urged viewers to call a special phone number for help with complaints that would later form the basis for stories aired on nightly newscasts.
At the Washington Post, Morton Mintz, the dean of the new consumer writers, covered the business community’s sacred cows — drug companies, the oil industry, the automakers — while Congress tightened the regulatory noose to protect buyers. Mintz, still going strong t 91, recalled there was a different make-up of Congress then. “Members took their job of oversight seriously,” he said giving reporters like Mintz plenty to write about. “There’s very little of that any more.”
The press was crucial to the passage of new laws and regulations in Washington and in the states. Once it uncovered some scam or other, there were calls for more regulation. And once again the inherent American tension between strong and weak regulation surfaced as it has today in the recent fight over tougher rules for the banking industry. Even after the Consumer Financial Protection Bureau started operations, lobbyists for financial institutions continue to find ways to weaken its authority.
In the old days much of the business community echoed C. Lane Breidenstein who headed the Detroit Better Business Bureau and called for “increased emphasis on self-regulatory procedures” on the part of business. That was something Nader and the “local Morton Mintzs” working in the trenches at large dailies did not have in mind. Breidenstein’s business community preached more consumer “education.” The consumer movement preached more consumer “regulation.” The fight between education and regulation continues to this day.
In a 2008 piece, the Columbia Journalism Review reported “Nader framed issues as a struggle between the little guy and the big corporations, and to many good reporters of that era, protecting the little guy was what journalism was all about.”
In a speech to the American Society of Newspaper Editors in early 1973, association president J. Edward Murray, then editor of the Free Press and later publisher of the Boulder Daily Camera, made the case for consumer reporting:
“The consumer movement…affects both the image and the performance of the business community. And it seriously affects both the principles and practices of advertising, which is the financial base of newspapers. Consequently, if we can cover the consumer movement with both fairness and distinction, we will not only fulfill our responsibility on an important news story, but we will greatly help our credibility in the process.”
For awhile news outlets bit the hand that fed them bravely challenging local advertisers. The St. Petersburg Times tested claims for consumer products and reported results in a dedicated section called “Watch This Space,” often running into opposition from advertisers. Advertising Age called the paper “damn gutsy” after it documented that a local appliance dealer had engaged in deceptive sales practices, and the dealer pulled $235,000 worth of advertising.
The Louisville Courier-Journal and the Toledo Blade declared moratoriums on ads from insurers selling health and accident policies after readers complained about shoddy sales practices and lack of disclosures about premium increases and other contract terms. The month-long ban cost the Courier-Journal $250,000 in ad revenues.
Writing about my new career for a college sorority magazine, I noted “This kind of reporting offers plenty of challenge and controversy—when you write about the way other people make their money, you can be sure there is controversy.” Several times merchants told me: “young lady, you’re bad for my business.” Consumer reporting was bad for some businesses. No supermarket wanted it known that it sold hamburger loaded with bacteria, and none wanted their prices revealed each week as the Milford (Conn.) Citizen did. Supermarkets in Detroit cringed when both the Free Press and the News listed violators of state food inspection laws. Car dealers in Portland pulled their ads when The Oregonian ran a column by syndicated columnist Mike Royko that called the average car salesman “a sneaky liar” and described sales people as “double-taking, deceitful, confidence men.”
Business push back came quickly especially when consumer writers exposed the practices of the holy trinity of local advertisers — supermarkets, car dealers, and real estate brokers. Adding the banks made a holy foursome that could and did raise holy hell. At the beginning of 1972 Howard L. Grothe, the advertising director of the Miami Herald , challenged his colleagues to take a stand against the consumer movement. He told Editor & Publisher he wished that editors would “play down” coverage of consumer issues and comments by leaders of the movement.
The Free Press and the News stopped running lists of violations arguing they did not reveal a pattern of cheating, and that short weighting was the result of human error. When several papers published stories showing that supermarkets sold out-dated food, supermarkets and their national food advertisers retaliated by cancelling their advertising. Reporters soon found that food stories were killed or rewritten. At the Chicago Sun-Times , editors substantially rewrote a story about food codes after executives from Jewel Food Stores complained.
By the early 1990s newspaper editors openly sided with car dealers who complained when a story — even the benign how-to variety — strayed into forbidden territory. One infamous case in 1994 involved San Jose Mercury News reporter Mark Schwanhausser who wrote a personal finance piece telling consumers how to arm themselves with information before they bought a car. He didn’t name names or accuse any dealer of misdeeds.
Dealers went ballistic anyway and yanked $1 million of advertising. Paper publisher Jay Harris wrote a mea culpa letter repudiating the article, gave a local dealer space in the paper for a commentary, and ran a house ad listing 10 reasons why readers should buy or lease their next new car from a factory-authorized dealer. “The chilling effect can be very subtle,” Schwanhausser told CJR in 1994. “When you start guessing what people will react to, you can find all kinds of reasons not to write a story.”
The days of hard-hitting consumer reporting were numbered—a decline that went hand-in-hand with the decline of big city dailies, which were losing readers and advertisers. Indeed the same issue of Sales Management that told of the rise of gutsy consumer reporting ran a chart showing that the federal government was projecting a slowdown in newspaper growth.
Losing ad revenue because of a consumer story was a luxury papers no longer could afford. Years later I asked Murray what caused the beginning of the end. Murray said that in the mid-1970s senior editors increasingly came under the rules of “management by objective.” Between 10 and 20 percent of their bonus compensation became tied to the paper’s overall profit goals. Publishing hard-hitting consumer stories put their own pocketbooks at risk. Never mind consumers’.
“Editors became more conscious of creating an atmosphere that was favorable to shoppers and trying to reach people 18 to 49,” he explained. “Aggressive consumer reporting was not encouraged and subtly discouraged.” Newspapers found it difficult to keep circulation moving, Murray added, noting that journalists abandoned “the old leadership they used to give to hard-hitting stories in favor of giving readers what they wanted.” What editors perceived they wanted were buying tips and personal finance advice. Consumer writers accustomed to reporting the names of businesses engaged in marketplace abuses called this the bush league of consumer journalism.
Something else was at work. At the height of Nader’s influence in the early 1970s, former Supreme Court Justice Lewis Powell penned a far-reaching memorandum to the U.S. Chamber of Commerce that would mark the beginning of the decline for the third consumer movement. Powell called Nader “the single most effective antagonist of American business thanks largely to the media.” Nader had to be stopped, and Powell exhorted business to fight back. “The overriding first need is for businessmen to recognize that the ultimate issue may be survival—survival of what we call the free enterprise system.”
Powell charged that business had ignored this threat and urged “careful long-range planning” and “consistency of action of an indefinite period of years” to reverse what he believed was a dangerous trend. Business wasted no time. The managerial elite of American business organized the Business Roundtable in 1972 to fight against regulations, unions, and the public’s growing hostility to corporate America — a sentiment unquestionably fostered by Nader. The Roundtable helped defeat anti-trust legislation and most important for the consumer movement’s survival, the federal consumer protection agency that would have given consumers a cabinet level home.
The struggle over the agency was the high water mark for the consumer movement. There was another achievement in 1991 — you might call it a mini high water mark — when Congress standardized Medicare supplement insurance policies allowing insurance companies to sell only ten standardized plans. It was a successful attempt to end the serious marketplace abuse and fraudulent and deceptive sales practices perpetrated on seniors. But twenty years later, the protections were largely irrelevant as the move to privatize Medicare continued apace with private Medicare Advantages plans — more than 100 in some markets — competing on small differences for the seniors’ dollars.
While business retaliation and dominance in resetting the national agenda were largely responsible for the movement’s decline, consumer leaders, too, were to blame. They had no clear focus of where they wanted to lead the millions of Americans who were now accustomed to demanding good value and safe products and services. If they weren’t leading, where was the press to turn for sources and story ideas?
The movement fragmented as issues grew more complex. Consumer rip-offs were no longer a matter of supermarkets putting too much fat in ground beef and mislabeling the package. Exposing back-office bank shenanigans that inflated credit card rates was much harder. It was more difficult to deconstruct the economic arguments propelling the cry to deregulate American industries. Many consumer advocates were not up to the task. In fact, they signed on to the deregulation movement even embracing its language. The word “reform” came to mean improvement in the minds of the activists who helped sell the public on the notion of change. The change the deregulation movement had in mind was mostly improvement for business; that is, freedom from regulatory constraints.
Nader himself was torn over deregulation—an equivocation that split the consumer movement. Writing in the New York Times in 1975, Nader and Mark Green, who later became New York City’s consumer affairs commissioner, argued it was “essential to avoid the conceptual confusion among regulation which should end, regulations which should continue, and new regulation which is needed.” They wrote that deregulation was appropriate in markets where there was product diversity and price competition such as airlines and surface transportation like trucking — both of which were deregulated with the help of consumer advocates.
But once consumer advocates traveled down that road, it was impossible to turn around. Supporting any deregulation was like dropping the atomic bomb. Even as they went along with the deregulation, they had little clout. Congress was listening to the Business Roundtable, not Nader and his acolytes. Members ignored Nader’s please for “good” regulation. Consumer organizations backed deregulation believing that consumers would benefit from lower prices for airline tickets, groceries shipped by interstate trucking, telephone calls, and banking services. In their minds, the marketplace would triumph.
But as the years went on those in the camp of less regulation camp had second thoughts. In the summer of 1987 the New York Daily News ran a story — lengthy by today’s standards — titled “Consumerism is running out of gas.” Richard Kessel, who headed the New York state Consumer Protection Board, told the paper: “It seemed like a good idea to keep the markets in check by allowing competition. But just look at what happened with airlines, telephone, banks and cable TV.” The Daily News summed up the advocates’ dilemma:
“Consumer advocates admit they are nearly powerless to cope with the new generation of consumer woes. They key problem, they say, is deregulation, which has allowed big business to grow stronger and more arrogant while stripping consumers of the laws and guidelines that are needed to fight back.”
The political shift from regulation to laissez faire, budget cuts at the federal regulatory agencies, the demise of state consumer agencies killed off by pro-business fever, the push for personal finance reporting, and the news executives’ preference for “news you can use,” a.k.a. consumer tips and how-to stories took their toll, and hard-hitting consumer reporting withered away.
The exception to the media’s disinterest was television, the Columbia Journalism Review reported in a 1994 piece called “Whatever Happened to Consumer Reporting?” TV reporters for news magazine shows carried on the tradition — at least for awhile. CJR pointed to an “outstanding” consumer reporting investigation by CNBC that documented the fire hazard posed by rags that had been soaked in a certain wood stain. ABC sent producers into Food Lion supermarkets in North and South Carolina to pose as employees armed with hidden cameras. The cameras recorded what ABC reported on Prime Time Live were unsavory, unsafe, and illegal practices in the sale of food.
Food Lion sued sending the case into the record books of journalistic history. Eventually a federal appellate court ruled that journalists who lie on employment applications to gain access to private facilities for newsgathering purposes are not protected by the First Amendment and may be liable for other offenses such as trespassing. The Food Lion ruling chilled hidden camera reporting, and news outlets thought long and hard before doing similar stories.
By the 1990s and continuing through the first decade of the new century and into the second, personal finance stories of varying journalistic quality had become the new consumer reporting. The stock market boom, deregulation of savings accounts and private pensions, new mortgage arrangements, and credit cards with sky high interest rates that would have been criminally usurious in the old days had turned the financial marketplace into a deregulated jungle much the way the meat-packing industry appeared as a jungle to the early muckrakers.
And as in the first decade of the 20th century, consumers needed help. This time the media rather than the government came to their rescue. In her book Pound Foolish, published in 2012, Helaine Olen noted “the personal finance and investment industry is a juggernaut, a part of both the ascendant financial services sector of our economy and the ever-booming self-help arena.” Personal finance pieces were easy to do and attracted big advertising bucks. Olen reported that in 1999 financial services advertising accounted for about one-third of newspaper ad monies. In 2011, financial services advertising totaled a shade less than $9.1 billion with Nielsen reporting that the top increases in promotional spending by category were all financially oriented categories.
Instead of struggling against the big corporations, the new ethic dictated that the little guy could now compete with the big boys. He or she could invest in stocks and bonds, manage pension plans, tap home equity when they needed a loan, and profit from those “free” credit cards that were being passed out like Christmas candy.
The dark side of personal finance reporting, the theme of Olen’s book, rarely makes it into the media. Instead press focuses on wealth accumulation (getting rich which most people can do if they take the advice the story suggests); personal empowerment (everyone can control their financial destiny); and government safety nets like Medicare and Social Security are in trouble (investing for your own future is doubly important). There are few negative messages in today’s personal finance reporting. But we’ve learned in the last four years,” educating” people by telling only one side of the story spawns disastrous consequences.
In 2008 the Columbia Journalism Review discussed a 1991 story published in USA Today extolling the virtues of home equity loans and calling them an “essential finance tool.” The paper played down the risk that homeowners could lose their homes if they couldn’t repay their loans. Indeed it told readers “almost no one loses his home because of home-equity loans.” The mortgage meltdown showed otherwise.
With the help of the media, America has morphed from a culture of consumer activism to one of consumerism, which has come to mean encouraging the purchase of ever-increasing amounts of goods and services. Consumerism along with business reasserting its privileged position in American society has turned the crusades and even the advice of the last consumer movement on their head.
Take, for example, the advice to buy bigger quantities because the unit price was cheaper. The business community caught on and now sells gigantic portions of food and soft drinks that may offer better financial value but have contributed to the obesity epidemic. Nader’s insistence that professions like doctors and lawyers be allowed to advertise their services so consumers could find the cheapest ones paved the way for drug company direct-to-consumer advertising on TV and destructive advertising by hospitals both of which help boost the cost of medical care.
Consumerism has shifted marketplace engagement from “we” — as in laws that protect us all — to “me,” as in how can I buy the product that’s best for me. Sellers are well aware of this change. Their use of the pronoun “my” to label their information channels like Delta Airlines’s My Delta, Aetna’s My Plan, or Chase’s information flyer that says the bank is “focused on YOU” reinforce the transformation. It gives the impression consumers are in charge of their financial destiny.
The 60 Minutes investigation of the nation’s credit reporting agencies shows otherwise.