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SANTA MONICA, CA – Consumer Watchdog today opposed SB 726, a California Senate Bill that would curtail the ability for critics to speak out against questionable business practices.

The bill was introduced as gut and amend legislation by Sen. Ben Hueso. The Assembly Banking and Finance Committee will hold a hearing on SB 726 on Monday, June 27. In a letter to Assembly Banking and Finance Committee Chairman Matthew Dababneh, Consumer Watchdog's John M. Simpson wrote:

“SB 726 would limit what could be said about a business when someone called for its dubious practices to be investigated by state officials.  The bill would provide an unwarranted shield for businesses that engage in predatory and unfair practices.  Simply omitting one fact about a business in a call for a necessary investigation could be deemed a violation of the law under the bill’s provisions.”

Read Consumer Watchdog’s letter here: http://www.consumerwatchdog.org/resources/ltrsb726062216ver5.pdf

Consumer Watchdog understands that Herbalife is a shadow sponsor of SB 726. Herbalife’s practices have been investigated by the Federal Trade Commission for more than two years and are the subject of more than 700 complaints to Attorney General Kamala Harris.

“Public complaint is the bedrock of consumer protection,” Simpson wrote. “Without consumers and public interest organizations to blow the whistle on dangerous or unscrupulous practices, regulators may never have learned about, for example, exploding Takata airbags, Firestone tires or Pinto engines.”

The bill would limit the ability of organizations such the nonpartisan, nonprofit Consumer Watchdog to defend consumers by speaking out against potentially abusive and wrongful practices by businesses.  In fact, it would limit anyone’s ability to voice concerns about a business that is cheating consumers or breaking the law.

“The public interest is best served by robust debate.  Shining a light on questionable practices is often the impetus for an investigation and appropriate action by state officials,” Simpson wrote. “The California legislature has a history of enacting protections for, not restraints on, whistleblowers.  SB 726 would have the opposite effect, creating a fear of prosecution among employees, public interest organizations and consumers that would chill the free speech necessary to bring unfair practices into the open and protect consumers. It serves no purpose other than to shield shady business practices from scrutiny.”

Consumer Watchdog noted that the consumer complaints filed against Herbalife with California Attorney General Kamala Harris’ Office range from issues related to wage theft, labor rights, and deceptive business tactics.  Those complaining expressed grievances about Herbalife using deceptive marketing and unfair business practices to make a profit at the victim’s expense.

“It is not surprising that a company that has been under investigation by the Federal Trade Commission for the past two years, and is the subject of hundreds of complaints about its predatory practices by California consumers, would seek to shield itself from further scrutiny,” the letter continued. “Indeed, if this bill becomes law, companies like Herbalife engaging in questionable practices and armed with well-financed legal resources, will use it not only as a shield, but also as a sword against their opponents. It would be shocking if the California legislature chose to go along with the scheme.”

“SB 726 would violate the First Amendment.  Instead of protecting shady businesses you should protect the consumers and people of California and not infringe on their First Amendment rights. Consumer Watchdog calls on you to reject SB 726,” the letter concluded.

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