Proposed legislation limits regulatory authority on Consumer Affairs Department

COLUMBIA, S.C. (WCSC) - New legislation limits the regulatory authority of the South Carolina Department of Consumer Affairs on auto dealers.

Wednesday, the state Senate Banking and Insurance Committee voted to bring S-483 to the floor. The department said it would make it more difficult to catch bad actors.

Right now, the department can ensure auto dealers are following regulations by visiting for a surprise inspection or compliance review. The department loses that power under the new rules.

“It’s one thing to protect consumers. It’s another thing to persecute businesses,” Sen. Josh Kimbrell (R- Spartanburg) said. “We can’t treat every business as if it’s predatory, and we can’t treat every consumer as if they’re not smart enough to make decisions.”

The legislation brings up the central question: should the department proactively inspect for business violations, or should they only inspect when they have proof of wrongdoing?

The legislation favors the latter. It’s supported by the South Carolina Automobile Dealers Association. Executive Vice President Sims Floyd, Jr. said he had a hand in writing it.

“This agency is in dire need of reform,” Floyd testified at a February 2023 House Legislative Oversight Committee Public Input meeting.

“You’ve got family businesses that are just trying to conduct business and they have investigators show up and intimidate,” he said at the time.

The association sued the Department of Consumer Affairs last year. The litigation is still pending.

The Department said those reviews are in their mandate and have been professional.

“We continue to believe that we’re doing, and that we did, what the legislature wanted us to do,” South Carolina Department of Consumer Affairs Director of Communications Bailey Parker said.

The department said these checks get results. In documents it provided to the House Legislative Oversight Committee, the department said it recovered $727,978 of closing fee refunds and adjustments to 3,775 South Carolina consumers between July 2017 and June 30, 2022. In previous testimony, Floyd said that number is a small percentage of total transactions, which are over 2 million in a five-year period.

“If we were unable to do those compliance reviews, then we might not be able to find violation,” Parker said. “At the end of the day, this would put the responsibility of the consumer to know the law.”

The future of a different bill is a bit more unclear. S-365 removes the Department of Consumer Affairs as its own state agency and puts it under the governor’s executive branch.

That move could open the department up to political influence, some senators warned.

“I don’t think consumers will feel comfortable that they can take their complaint to a neutral body, and someone will fight on their behalf,” State Sen. Darrell Jackson (D-Richland) said.

The bill was sent back to a sub-committee Wednesday. State Sen. Michael Gambrell (R-Anderson) told attendees to “show up” to the subcommittee meeting if they cared about the issue. “Because if you don’t, we’re going to do it,” he said.

He agreed the department needed some reviews of its authority but doesn’t support its reclassification.

Sen. Ronnie Cromer (R-Lexington) said they were originally established to be independent: “We still would like for it to maybe remain independent, but with some nuances.”

But not everyone agrees, including State Sen. Lawrence Grooms (R-Berkeley and Charleston): “There’s too many times when a government agency has very little, if no, oversight, they become the monster that goes after folks unnecessarily.”

The politicization is troubling for the department.

“Consumer protection is not a political issue,” Parker said. “At the end of the day, this would put the responsibility of the consumer to know the law.”

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