ConsumerWatchdog.org isn't a consumer group at all. Consider these facts: It claims to work for the public interest, but refuses to reveal who its funders are; Rakes in millions of dollars for itself from a self-serving 'intervenor fee' provision it inserted into a ballot initiative; Has been fined by California's Fair Political Practices Commission for illegal actions; Has a founder who has pocketed millions from the organization and its affiliates, and lives in a $1.75 million mansion; and Is funneled money by special interests, including corporations, for its grandstanding and attacks.
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 990 Forms
Consumer Education Foundation 990 Forms
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.
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?'
ConsumerWatchdog's IRS filings reveal excessive compensation paid to its founder and senior staff. See the 990 forms above for full details.
ConsumerWatchdog claims credit for Proposition 103, California's landmark insurance reform. However, the group has used the initiative primarily as a vehicle for its own financial benefit — particularly through the intervenor fee provision it wrote into the measure. The myth of ConsumerWatchdog as a consumer champion obscures a record of self-dealing and lack of accountability to actual consumers.
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Read MoreConsumer Watchdog, a self-styled consumer group, is calling on the state Fair Political Practices Commission to require political bloggers like me to reveal our clients, something we already do. At the same time, Consumer Watchdog refuses to disclose the sources of its financial support.
Read MoreGroup Rakes in $860K from Self-Serving Provision; Only Group to Collect Fees Since 2007. 'ConsumerWatchdog.org, which wrote a provision into a successful ballot measure it sponsored to reward groups that intervened in insurance rate cases, hauled in nearly $860,019'
Read MoreNew IRS Filings Show ConsumerWatchdog.org Raked in Nearly $3 Million in Lawyer Fees in 2010. 'ConsumerWatchdog received more than $2 million in lawyer fees, more than $971,000 in special state intervenor fees, and paid its founder more than $500,000 in consulting fees in 2010'
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