When is paid employee a volunteer? When a surcharge is a discount.

In response to our Consumer Alert posted yesterday, John Healy of the Los Angeles Times Opinion Staff posted a blog today about the fluid definition of ‘a volunteer’ that the insurance industry-backed Proposition 33 would like to use to defend their deceptive television ads.  In the article (which we’ve included below as well our video), Healy points to the core question our video asked:

Is a Paid Employee a Volunteer? I guess if you call charging people more for their auto insurance simply for not driving a “discount,” then why not call an employee a volunteer?


Yes On Prop. 33 Campaign Redefines ‘Volunteer’


October 3, 2012

The sponsors of Proposition 33, a measure to allow auto insurers to charge higher or lower rates based on whether a driver had coverage in the previous five years, don’t seem content just to stretch the truth about the nature of their measure (which The Times’ editorial board opposes). They’re also running television commercials that feature two supposedly ordinary consumers who actually work for the political consulting firm hired to help pass it.

One ad (with English and Spanish versions) stars a woman who introduces herself as Adriana, a driver with car insurance. The other features a woman who introduces herself as Brandi, a recent college graduate. Both say Proposition 33 would save them money by increasing competition among insurers for their business. Neither commercial mentions that the women are employees of Marketplace Communications, the Sacramento-based communications firm promoting the initiative.

Consumer Watchdog, an advocacy group leading the opposition to Proposition 33, filed a complaint about the commercials Tuesday with the state Fair Political Practices Commission. The complaint suggests that the commercials violated a state law requiring campaign ads to disclose when people are being paid to appear in them.

“We do not know how much either woman made from her employment on the campaign, or specifically for the spot in question,” the complaint states. “However, their employer has benefited significantly from the arrangement. As of the last reporting deadline, Marketplace Communications has received $500,750 in payments from the Yes on Prop 33 Committee.”

In a letter to FPPC Chairwoman Ann Ravel, Consumer Watchdog’s Carmen Balber argues: “The public has a right to know whether the people they see in advertisements are authentic advocates for a ballot measure or simply paid for their advocacy. In this case, the paid campaign spokespeople clearly violate the spirit of the law if not its letter.”

Marketplace shot back in a statement Tuesday, accusing Consumer Watchdog of “another new low” for attacking TV ads “for featuring real women who also work at Marketplace Communications.” It went on: “The two women told their own story.  They volunteered their stories in the course of working on the effort to pass Proposition 33.”

The law in question requires TV ads to prominently disclose if anyone in them was paid to be on camera. But the requirement only applies to those paid $5,000 or more for their appearance. So the legal issue here is whether the payments the two women received for working at Marketplace Communications on the Yes on 33 campaign can be interpreted as appearance fees, even if they weren’t paid specifically for their roles in the commercials.

Marketplace argues that it didn’t violate the law, and that may be technically correct. But the campaign misleads the public by presenting employees of its political consultant as disinterested consumers who just want a break on their insurance premiums.

That seems par for the course for backers of Proposition 33, the latest in a long series of efforts by Mercury Insurance founder George Joseph to undo part of 1988’s Proposition 103. That measure lowered and rationalized insurance rates by tying them more directly to the risk that individual drivers posed. As part of that effort, it barred companies from imposing surcharges on new customers who arrive without coverage.

Instead, they were required to rate drivers based on their years of experience, their driving record and the number of miles they traveled annually. The state insurance commissioner could add other, optional factors, but only if they were substantially related to the risk of loss.

One of those optional factors allows companies to offer discounts to drivers who renew their policies. Proponents of Proposition 33 argue that it would make those discounts portable. Or, as they put it in a banner advertisement running online (including, ahem, on this site), “Proposition 33 Allows Drivers to Switch Insurance Companies and Keep Their Continuous Coverage Discount.”

That claim isn’t true, however. The continuous coverage discount created by Proposition 33 is different from the renewal discount that many drivers receive today. And because insurers offer varying degrees of discounts, switching from one insurer to another would probably result in a different markdown off a different base premium. In other words, Proposition 33 wouldn’t entitle a customer with a 10% loyalty discount from Company X to a 10% discount from every other insurer.

In its response Tuesday, Marketplace said: “We encourage Consumer Watchdog to continue drawing attention to the ads because the message they deliver is both honest and direct.”

The message is direct, all right, but it isn’t honest.


Posted by Daniel Palay, New Media Director of Consumer Watchdog Campaign and supporter of StopProp33.com.  For more information on the campaign visit us on Facebook and Twitter