Saturday, March 5, 2011

Making Money Marketing





The new U.S. Consumer Financial Protection Bureau isn't even up and running yet, and already it seems its funding could be in trouble. Prof. Elizabeth Warren, the champion of the bureau, is trying to protect her project in the face of a conservative House majority.



The organization, birthed last year during the Dodd-Frank financial reform, would bring together the seven government agencies already in place with consumers' interests in mind. Reuter's Prism Money blog contends that Harvard Law School's Warren is a champion worth protecting.



Warren is a bank watchdog, intent on protecting consumers who might be subject to banking and credit abuses.



Warren feels the problem lies in the hits the middle class has been taking in the face of the credit industry's determined, bank-friendly marketing. Fees, finance charges, high rates are all big problems for families struggling just to pay the bills.



The agency won't be up and running until July and Warren has yet to be dubbed its head. Prism urges those who'd like to see the bureau get off the ground to contact your senators and congressman to "urge them to leave the bureau's funding alone." You can also ask your credit union or community bank directly to support the independent funding of the organization.



CLICK HERE for a list of U.S. Senators and HERE to write your rep in the House of Representatives.



Why Elizabeth Warren needs your help to police the banks [Reuters]







Republicans are considering ways to trim the federal budget — and the funds that go toward public broadcasting are on the chopping block. Now it appears that certain public radio stations may be violating federal law to convince listeners to lobby Congress to stop these cuts.



Reps. Betty McCollum (D-MN) and Ed Markey (D-Mass.) already staged a silly press conference this week with Elmo, Grover and Big Bird dolls, along with someone in an Arthur the Aardvark costume, to try to embarrass Republicans into continuing to pay for public broadcasting. Of course, using these characters was probably not a good marketing idea to begin with, given the money-making powerhouse that Sesame Street represents and the enormous profits that have been earned through merchandising these characters.


Now public radio stations such as KCRW 89.9 in Santa Monica are sending out press releases with detailed information about the recommended spending cuts from the House Appropriations Committee in H.R. 1, the Full Year Continuing Appropriation Act. KCRW’s message comes from Sarah Spitz at kcrw.org and urges listeners to “take action in support of public broadcasting” by visiting another website. That website allows you to “Click Here to Write Congress” and asks visitors to “contact your representatives in Congress now and urge them to stand up for public broadcasting funding.”


What KCRW is doing, however, may violate the federal Anti-Lobbying Act. 18 U.S.C. § 1913 provides that “No part of the money appropriated by any enactment of Congress shall, in the absence of express authorization by Congress, be used directly or indirectly to pay for any personal service, advertisement, telegram, telephone, letter, printed or written matter, or other device, intended or designed to influence in any manner a Member of Congress, a jurisdiction, or an official of any government, to favor, adopt, or oppose by vote or otherwise, any legislation, law, ratification, policy, or appropriation, whether before or after the introduction of any bill, measure or resolution proposing such legislation, law, ratification, policy or appropriation.”


Under a prior version of the statute as it was interpreted by at least one court decision, this anti-lobbying provision applied only to federal officers and employees. But the law was amended in 2002 and now applies to anyone who receives federally appropriated funds including recipients of federal grants such as NPR. Such grants cannot be used to lobby Congress directly or indirectly, which would include trying to persuade NPR listeners to lobby Congress on NPR’s behalf. So if any of the funds received by KCRW from the Corporation for Public Broadcasting were used to pay Sarah Spritz’s salary in writing this lobbying appeal or to fund the facilities used to broadcast her message on behalf of the radio station, then KCRW has violated federal law.   And if any federal funds were used to pay for this website, that is also a violation of the law.



This is not an isolated incident either.  Both of the public radio stations in Washington, D.C., the nation’s capitol (WETA and WAMU) have postings on their websites telling listeners that they should call their congressional representatives to stop these proposed funding cuts.


The amended 18 U.S.C. § 1913 has gone largely unnoticed and has not yet been used to prosecute the recipients of federal funds (e.g., Planned Parenthood) who appear to lobby Congress regularly.  But there is no question about the reach of this federal provision and the possibility that public radio stations such as KCRW may be violating the law in their lobbying efforts to stop Congress from getting rid of taxpayer funding for public broadcasting.


Will the Holder Justice Department do anything about this possible violation of federal law? Unfortunately, given its record over the past two years of politicized law enforcement decisions, that is very doubtful.


However, note to entrepreneurial lawyers:  These possible violations of the Anti-Lobbying Act by public radio stations may trigger the qui tam provisions of the federal False Claims Act, which applies to every organization that receives money from the federal government.  The FCA imposes civil liability and stiff penalties on anyone who defrauds the government by getting a  false or fraudulent claim paid.  Using federally-appropriated funds to engage in illegal lobbying activities may very well violate the FCA.  Private parties can assert qui tam claims under the FCA and can recover up to triple damages and reasonable attorneys’ fee and costs.


So even if Eric Holder’s Justice Department doesn’t want to go after NPR, private parties and their lawyers may be able to do it and make a profit on it.




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