Unlike respected consumer groups like Consumers Union and the Consumer Federation of California, ConsumerWatchdog.org is not a membership organization. While receiving more than $1 million in contributions, it refuses to name its backers – a stunning lack of transparency.

ConsumerWatchdog also received more than $2.2 million in attorney fees, according to its 2008 Form 990 (the latest available at the AG's office).

A complete link to the organization’s activities is listed here.

Consumer Watchdog 2015 990 Form Consumer Watchdog 2013 #2 990 Form Consumer Watchdog 2013 990 Form Consumer Watchdog 2012 990 Form Consumer Watchdog 2011 990 Form Consumer Watchdog 2010 990 Form Consumer Watchdog 2009 990 Form Consumer Watchdog 2008 990 Form Consumer Watchdog 2007 990 Form Consumer Watchdog 2006 990 Form Consumer Watchdog 2005 990 Form Consumer Watchdog 2004 990 Form Consumer Watchdog 2003 990 Form Consumer Watchdog 2002 990 Form Consumer Education Foundation 2015 990 Form Consumer Education Foundation 2014 990 Form Consumer Education Foundation 2013 990 Form Consumer Education Foundation 2012 990 Form Consumer Education Foundation 2011 990 Form Consumer Education Foundation 2010 990 Form Consumer Education Foundation 2009 990 Form Consumer Education Foundation 2008 990 Form Consumer Education Foundation 2007 990 Form Consumer Education Foundation 2006 990 Form Consumer Education Foundation 2005 990 Form Consumer Education Foundation 2004 990 Form Consumer Education Foundation 2003 990 Form

In addition to donations from special interests and pay-to-play payments, ConsumerWatchdog reaps millions of dollars from something called “intervenor fees.”

Intervenor fees allow the group to enter into rate cases at the last minute. For a result of their efforts, ConsumerWatchdog extracts a fee from insurance companies as part of the deal.

How did this happen? The provision was written into Prop 103 by ConsumerWatchdog. That way, it couldn’t be challenged – and was a self-perpetuating funding source for the group.

According to this information from the Department of Insurance, ConsumerWatchdog collects nearly 70 percent of the intervenor fees granted in the State of California.

http://www.insurance.ca.gov/0250-insurers/0300-insurers/0200-bulletins/prop-103-recoup/report-on-intervenor-program.cfm

But the group’s tactics are plain for all to see. They’re in the intervenor fee business not to represent consumers (since they have no consumer members); they’re in it for themselves.

A Los Angeles Superior Court Judge recently took ConsumerWatchdog to task for just that reason.

According to a recent article in the Los Angeles Daily Journal, a legal publication, Judge William F. Highberger spent most of a recent hearing criticizing ConsumerWatchdog.org. He blocked an attempt for ConsumerWatchdog.org to intervene in the case and accused the group of "engaging in 'an opportunistic piece of objecting' designed either as a 'public relations exercise' or as an attempt to get paid by delaying the settlement.'"

The newspaper reports that the judge "called it 'another regrettable example of opportunism'" and told ConsumerWatchdog.org, "If this was such a good case, why didn't you guys bring it seven or eight years ago?". Another attorney lashed out the group saying ConsumerWatchdog.org's "only objective was "only to derail what has to be one of the greatest class action settlements of all time, given the hurdles."

Unlike most consumer advocates that put their resources into pro-consumer activities, ConsumerWatchdog seems more interested in lining its pockets.

In 2008, ConsumerWatchdog’s “outside counsel” Harvey Rosenfeld collected $448,574 from the group’s main account plus $100,000 from another account. ConsumerWatchdog director Jamie Court earned $189,462 plus expenses – just from the ConsumerWatchdog account alone. That’s nearly twice as much as the legislators he attacks daily. PR flack Doug Heller raked in $119,780 plus expenses.

Through affiliated organizations, it shifts money from one organization to another, according to forms filed with the IRS.

ConsumerWatchdog founder Harvey Rosenfeld set up the “Consumer Education Foundation.” Its main function is to funnel money to ConsumerWatchdog. Mr. Rosenfeld is the only paid employee of the Foundation, and paid himself $100,000 plus expenses in 2009 (the latest report available since ConsumerWatchdog is perennially late with its filings) for what appears to be the sole purpose of making a $187,500 grant to – you guessed it – ConsumerWatchdog.

Attached are the Form 990s on the Attorney General’s Website

Consumer Watchdog 2015 990 Form Consumer Watchdog 2013 #2 990 Form Consumer Watchdog 2013 990 Form Consumer Watchdog 2012 990 Form Consumer Watchdog 2011 990 Form Consumer Watchdog 2009 990 Form Consumer Watchdog 2008 990 Form Consumer Watchdog 2007 990 Form Consumer Watchdog 2006 990 Form Consumer Watchdog 2005 990 Form Consumer Watchdog 2004 990 Form Consumer Watchdog 2003 990 Form Consumer Watchdog 2002 990 Form Consumer Education Foundation 2015 990 Form Consumer Education Foundation 2014 990 Form Consumer Education Foundation 2013 990 Form Consumer Education Foundation 2012 990 Form Consumer Education Foundation 2011 990 Form Consumer Education Foundation 2010 990 Form Consumer Education Foundation 2009 990 Form Consumer Education Foundation 2008 990 Form Consumer Education Foundation 2007 990 Form Consumer Education Foundation 2006 990 Form Consumer Education Foundation 2005 990 Form Consumer Education Foundation 2004 990 Form Consumer Education Foundation 2003 990 Form

Consumerwatchdog.org says Prop 103 is a model for health insurance regulation. They claim that Prop 103 successfully lowered auto insurance rates, and that applying the same model to the health insurance industry will lower health insurance premiums for ratepayers.

However, they have wildly overstated the impacts of Prop 103 – without mentioning that the ballot measure has put millions of dollars into their pockets.

From 2003 - 2010, Consumer Watchdog claims it achieved $1 billion in auto insurance savings by challenging rate increases. That amounts to less than 1% of total premiums paid over that seven-year period.

Consumer Watchdog claimed Prop 103 saved drivers $60 billion since 1988. But other analysts have rejected that estimate and challenged its methodology.

In the 1988 general election ballot pamphlet, proponents of Proposition 103 made promises they didn’t keep:

• Rates did not immediately drop by 20%: implementation was delayed;

• Rates were not cut “permanently”: the most recent analysis of Prop 103

concluded that auto insurance rates rose 12.9% between 1989 and 2005; but

• Prop 103 did, in fact, generate significant administrative costs.

Insurance rates did decline in the first decade after the passage of Prop 103, but this was because of tort reform, tougher seatbelt and DUI laws, and better designed streets.

An academic study found that “14.5% of the relative decline in auto insurance premiums” was due to a tort reform and “attributed 50% of the relative decline” to greater seatbelt use. (Jaffee & Russell, 2001) An industry study found that “driving under the influence claims dropped by about 60 percent [during the 1990’s].” (Appel, 2004)

Proponents of AB 52 have stressed the importance of public intervention, citing compensation for intervening parties as the key to Prop 103’s success. Harvey Rosenfield issued a study in 1998 in which he said "Funded citizen intervention programs protect against unnecessary or duplicative proceedings, while providing consumers with the professional, skilled representation that insurance companies are able to obtain at policyholder expense.”

What Consumer Watchdog fails to say is that it has received $6.5 million in intervenor compensation for participating in Prop 103 proceedings at the CDI. About 30% of Consumer Watchdog’s revenues from 2003 - 2009 came from Prop 103 intervenor compensation, and those awards have grown over the years. In 2009, the organization received $2.4 million in awards, its primary source of revenue that year.

The California Department of Insurance estimates that Prop 103 will cost $25,306,686 to administer in fiscal year 2010-2011. It cost the Department at least $153 million to administer Prop 103 between 2001 and 2010, according to records from internet archives of the CDI website. This actual administrative cost was not completely offset by insurance company fees collected by the CDI; those collections fell short by almost $5 million.