Dubious Savings on Fraud Cases

When the San Diego City Council cut the consumer fraud unit of the city attorney’s office from nine to four staff members last summer, it looked on paper as if the city was saving $176,864. The money was to pay for more police officers, a higher priority.

But the true savings will probably be much less, and the cuts could even cost the city money, because civil cases of consumer fraud can generate penalties.

In each of the past four years, more than $200,000 in penalties had been collected by the consumer fraud unit, including $374,000 in 1988 and $415,000 in the first eight months of 1989. The city gets about half that, and most of the rest goes to the county. But even the city’s share went a long way toward covering the expenses of the nine-member staff, and in some years it more than covered the salaries of those handling the civil cases.

That makes the service a genuine consumer bargain for city residents. And, although it is not strictly the city’s concern, the elimination of the consumer complaint staff also takes money out the county government’s pocketbook, money that could well be used toward courts, jails and prosecutors.

To be sure, there are no guarantees to this form of “revenue.” No one wants city attorneys thinking about revenue when deciding whether to take a business to court for allegedly fraudulent practices.

But, in a city this size, shady business practices are probably common enough to make civil penalties a pretty sure bet.

All told, the benefits to consumers, who have few other avenues for redress for many complaints, seem to far outweigh the financial drain on the city budget, even in a tight year.