for example, propose Federal legislation where it is needed and State legislation where it is needed by such a network of communication. If you could have this type of representation available to the consumers, then I could see a method of obtaining adequate representation.

If I might, I would like to turn the microphone over for just a few minutes to Mr. Brown to talk to you about some of our suggestions.

[Testimony resumes at p. 54.]

[The statement follows:]

PREPARED BY PROFESSOR DONALD P. ROTHSCHILD, GEORGE WASHINGTON UNIVERSITY LAW SCHOOL; RICHARD D. MORENO, PRESIDENT, AYUDA LAW STUDENT; WINTHROP BROWN, STUDENT DIRECTOR OF CONSUMER PROTECTION CENTER, GEORGE WASHINGTON UNIVERSITY LAW SCHOOL

1. CONSUMER HELP

The Consumer Protection Center of the George Washington University's National Law Center operates on the premise that aggrieved consumers are entitled to immediate free help from one or more of the federal, state, local and private agencies created to assist them, and that consumers should be made aware that such remedies exist. This also requires that these agencies be made aware of and responsible to the nature and scope of consumer problems. The Center has distinguished itself from other consumer protection agencies by utilizing the University's facilities to achieve these goals through research and model development.

Until recently, the consumer has been on his own in the Washington Metropolitan area marketplaces. Since the Center's inception in the Spring of 1970, more than 25,000 consumers have called, written or walked into one of its outlets which are operated by law and undergraduate students, as well as professional and paraprofessional volunteers. The Center operates phone service at a local television station (WTTG-TV, Metromedia, Channel 5), two storefronts serving the inner city (AYUDA at 24361⁄2 18th Street, N.W.; and the Consumer Action Center, 2906 Martin Luther King Avenue, S.E.), and a research center (at George Washington University, 2000 H Street, N.W. Suite 100), which is equipped to do computer research. In addition, it produces consumer news broadcast, teaches classes in the public schools, publishes books and articles, and serves as a consultant to local government consumer protection agencies. During this time period, numerous local governmental agencies have developed, all of which have used the Center's research, to assist consumers.

The Consumer Protection Center is having a national, as well as local impact. A similar program has opened in New York City. Monographs about how to establish and operate model centers are being distributed nationally. The Center is publishing the Consumer Protection Reporting Service (W. H. Anderson Company, 1973) for professional and classroom usage.

Since the Center is involved in legal education, research, the development of model agencies to handle consumer problems, and consulting with numerous local government agencies that deal directly with consumers, I believe we are uniquely able to discuss the representation of citizen interests in consumer problems.

2. LEGAL REPRESENTATION OF CONSUMERS

In our experience the legal profession in general has not adequately represented consumers, or their interests, in marketplace disputes. This is not particularly surprising since the commercial law curricula in most law schools does not include consumer law, nor do the traditional commercial courses focus on consumer problems. Furthermore, criminal curricula practically ignore the very serious problems of white collar crimes in this country. Thus, most lawyers lack background information about the problems of consumers in our marketplaces which they should have obtained in law schools. Neither do lawyers regularly acquire this information in their practice.

Most consumer problems involve general damages of $100.00 or less, although the indirect consequences of such problems are usually greater. Yet a solution may require several hours of work, which makes representation uneconomic for the practicing bar. The many problems now existing in class action representation have not alleviated the economic difficulty in handling civil consumer actions. Small Claims Courts, which could be utilized to handle individual consumer problems, are usually used by lawyers for collection purposes, and are oriented in favor of the merchants. These difficulties, however, do not explain why lawyers (1) fail to establish bar referral services with practical fee scales for consumer problems; (2) oppose proposed local government and private, non-fee generating consumer protection agencies; (3) fail to propose legislative reform of consumer laws on state and local levels of government; or even (4) fail to represent consumer ethics to their business clients which have proved to be good business practices where utilized.

The public interest bar has not had any greater success in representing consumers, because in addition to the problems mentioned above, their client jurisdiction has been too limited and they have had too little funding to handle the enormous volume of existing problems. The public agencies in the Washington, D.C. Metropolitan area (which do not include the newly funded Office of Consumer Affairs, District of Columbia) handle approximately 2,000 complaints per month, while private agencies in the area handle another 1,000 complaints. As a comparison, the Office of Consumer Affairs in New York City handles approximately ten times this total. Even though half of these complaints may not require legal services, the residue is still substantial.

In summary, legal services available to resolve consumer disputes are grossly inadequate.

3. CONSEQUENCES OF INADEQUATE SERVICES

The sheer volume of consumer problems is relevant to outline the scope of legal services required, but a sizeable proportion of these disputes involve problems that can be handled and often resolved without recourse to formal legal action (paraprofessionally). For example, of our over 25,000 computerized, verified complaints as of July 1, 1973, over 60% concern the sale of goods and services (of which 15% involved automobile problems); 11% involved real property disputes; and 8% credit and related problems (See Table 1). Our staff may either refer a complainant to an existing organization with jurisdiction and expertise to handle such a problem, or may intervene directly between disputants to attempt a voluntary resolution of the problem. Our follow-up surveys of these efforts, based on a random sample of 20% of all complaints, indicate that in 31% of the cases we were able to clarify the problem and assist the consumer. In 29% of the cases we were able to solve the problem through our intervention to the consumer's satisfaction. In another 28% of the cases the consumer was able to help himself, or herself, without our intervention. In 10% of the cases the problem was not resolved, and in 2% of the complaints no action was taken. This means that in over 2,500 of the complaints which we have attempted to handle, there has been no resolution. Furthermore, despite the facility with which some complaints can be handled voluntarily, there is also a large proportion of problems which involve substantial legal complexity which we cannot attack directly. This category contains, for example, disputes concerning retail installment sales contracts, financing charges, warranties, default and repossession of durable goods and automobiles, bait and switch tactics and door-to-door sales. In these situations, the Center will attempt to enlist any potential legal services available, which brings us face to face with the problem of inadequate services.

Consumers, nonetheless, do seek legal help for their problems. For some time, the notion has been advanced that minority groups specifically, and low income consumers in general, will not use such services, even when available. because of distrust of establishment institutions. Our empirical research in the Washington, D.C. Metropolitan area show exactly the opposite-namely that the frequency of complaints to consumer protection agencies (public and private) by population is inversely related to the income levels of the consumers living in local jurisdictions (See Table 2). Since Consumer HELP is advertised as a joint project of the Law School and Metromedia Television, many con

sumers anticipate legal advice when they call us about their problems, and are frustrated when it is explained that the project is manned by law students and volunteers who are not able to give legal advice or legal opinions. Our storefronts report that a large number of walk-in consumers request the services of a lawyer. Bar referral, where available, is too costly many times to be justified by the amount of general damages involved in the average consumer problem. When we refer such consumers to public agencies which handle consumer complaints, they are also disabused of the notion that they will receive the traditional services of lawyers.

The consequences of inadequate legal services have many undesirable aspects. Where empirical research is conducted, these studies are replete with cases of suffering and misery, not to mention the economic waste involved, all of which could be obviated in many cases by proper legal services and legislation. The image of the legal profession as problem solvers is tarnished by the prerequisite of large fees. In fact, the notion that anyone is entitled to legal services does not seem to apply in our marketplaces. The traditional doctrine that our legal process operates through precedent and deterrent also seems inoperative. Our research indicates a substantial variation in both the incidence and types of complaints which various consumers experience (See Table 2). Problems of the elderly, women, low income, Spanish-speaking and other demographically sorted consumers varies considerably. Mr. Moreno has several vivid examples from our files at Ayuda which he will relate. Yet, inadequate representation has obfuscated these variations leaving large segments of our consumer population virtually without any legal services, legal precedent or legislative assistance. Disuse of criminal sanctions in consumer fraud cases has blurred the legal definitions of white collar crime, and made such sanctions an ineffective deterrent. Ayuda again serves as an instructive example. It is now a nonprofit corporation to increase its manpower and financial capacities. Yet, law school clinical programs are still inadequate to meet its needs. It has been unable to obtain sufficient funds from federal or local government, or sufficient expertice to help obtain funding. Neither Neighborhood Legal Services, nor Legal Aid has any Spanish-speaking attorneys in the District of Columbia. There are only six private practitioners in the D.C. Bar who are Spanish speaking. Unfortunately, this inadequacy is not atypical.

The total consequences of inadequate legal representation are impossible to measure, but the result is consumer frustration, cynicism about the integrity of the legal profession and our marketplaces.

4. PROPOSED SOLUTIONS TO INCREASE THE REPRESENTATION OF CITIZEN INTERESTS IN CONSUMER AFFAIRS

Hopefully, new materials and new clinical programs will stimulate legal education in the consumer field. There are a half a dozen law schools that have instituted new programs in consumer law this fall. Your hearings should focus attention on the unrealistic fees and inadequate services of the practicing bar in the consumer field. Bar associations will undoubtedly make arrangements to help alleviate these inequities. But, in my opinion, the problems of consumer representation require more ambitious corrective programs.

First, I think more funds should be made available for research and model development of public and private consumer protection agencies. We need a uniform method of taking, processing and resolving consumer complaints; and a uniform language to facilitate the exchange of information. We need computer research of the variations of consumer problems that exist in rural, urban and suburban marketplaces. We need to study how consumer and merchant problems vary according to the consumers' age, sex, income, occupation, education and other demographic factors. Such information also will allow us to evaluate existing and pending legislation in the consumer field on all levels of government.

Secondly, the emphasis on consumer protection should be shifted to the nexus of the problem-local city and county government agencies. The information flow should be from the consumer and the merchant to local agencies, then to state agencies, and then to federal agencies. It is important to note that at the local level, legitimate merchants regularly participate as members of such agencies. Once accumulated the information can then be analyzed,

evaluated and disseminated back to the source of the problems with federally and state legislated standards where needed. There has been a great deal of talk about shifting funds and other resources back to the states, cities and counties. However, in the field of consumer representation, I not only have failed to see any evidence of such a shift, but I regularly encounter resistance to this idea on the federal level.

Thirdly, I think there are certain areas of consumer protection which require the establishment of private, non-profit corporate agencies to represent consumers who do not have the political, economic or social power to obtain representation of their interests through local government consumer protection agencies, private practitioners, or even the public interest bar. These groups can enlist the assistance of law schools, bar associations and other volunteer groups.

In my opinion, a network of local government and private agencies working with the active support of an enlightened bar and backed up by the resources of the states and federal government could provide adequate representation for consumers and merchants in marketplace disputes. This concept is feasible and would result in the least amount of disruption of our marketplaces, while affording the greatest representation of citizen interests.