Public comments on proposed safeguards littered with industry lies
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When developing health, safety, consumer and environmental protections, agencies depend upon truthful feedback from the public. But lately, corporate malefactors are misleading federal agencies through manipulated public comments.

It’s suspicious when small business owners fight against basic protections from bad investment advice; when teachers, veterans and retirees want shareholders kept in the dark about corporate political spending; or when academics attack basic science and tout long-discredited studies.

When we scratch the surface of these ostensibly grassroots efforts, we often find thinly disguised fakery: astroturfing operations created by corporations.

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Earlier this year, I testified at a House Financial Services Oversight and Investigations Subcommittee hearing on how prevalent these deceptive industry tactics have become. Consider a few well-documented examples.

Anti-Shareholder “Activists”

For years, business interests have sought to limit the ability of shareholders to bring resolutions before annual meetings, such as resolutions requiring companies to disclose their political spending. At a Nov. 5, 2019 meeting on proposals to roll back shareholder rights, U.S. Securities and Exchange Commission Chairman Jay Clayton cited seven letters supposedly from regular people claiming that shareholder activism undermined their interests and calling for the censorship of proxy firms that advise shareholders on whether to back these resolutions.

It turns out those letters were “the product of a misleading – and laughably clumsy – public relations campaign by corporate interests,” according to an investigation by Bloomberg. The letters were orchestrated by 60 Plus, which is funded by the National Association of Manufacturers and the Koch Brothers’ money.

A letter from a retired teacher? She never wrote it, although the signature was hers. Letters from military veterans? They were the brother and cousin of the chairman of 60 Plus. The letter from the retired couple? Their son-in-law runs 60 Plus.

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Fake Experts Peddling False Claims

In 2019, Public Citizen published a detailed examination of George Washington University’s Koch-funded Regulatory Studies Center (RSC). The RSC regularly comments on regulatory measures, purporting to offer objective and unbiased analysis.

Yet 96 percent of its public comments recommend less regulation than the proposal or the status quo, and three out four comments were authored by someone with ties to other Koch funded groups. The report also unearthed numerous instances of RSC writers imparting deceptive or false information to regulators – such as grossly misstating the scope of regulation, exaggerating its annual growth and citing discredited studies on its costs.

The RSC’s writings often focus on environmental matters that have material implications for Koch Industries, opposing proposals to reduce pollution or combat the climate crisis. Trump administration regulators have acted on many of RSC’s polluter-friendly ideas, such as reducing the costs attributed to greenhouse gases and raising the bar for new energy efficiency standards.

The Chamber’s Pawns

In 2016, a handful of small business owners became the public face of Wall Street’s opposition to the U.S. Department of Labor’s proposed fiduciary rule, guaranteeing that financial advisers provide retirement savers with investment advice in their best interest. The existing rules allowed conflicts of interest that cost investors an estimated $17 billion annually.

Public Citizen contacted the small business owners featured in the U.S. Chamber of Commerce’s campaign against the fiduciary rule. One out of four turned out to be lobbyists for the brokerage industry or officials of the Chamber itself – evidently listed to pad the number of critics. One was even a government official.

The rest fared little better when faced with even minimal scrutiny. One California small business owner, who said the current system helped grow her business over the past 12 years, admitted she had only one employee. A person identified as a “human resources” officer was linked to a firm that no longer existed except as a website. And a Chicago nonprofit leader had no view on the fiduciary rule, didn’t realize he was listed as an opponent and upon finding out asked the Chamber to remove his name.

Trust, But Verify

These are just a few of the known attempts by industry to mislead regulators and rewrite the rules in their favor. The problem of fake industry comments has become so pervasive that Congress, inspectors general, law enforcement, the media and regulators themselves need to take it far more seriously.

If agencies paid closer attention to public comments on all sides of any rulemaking, some of the manipulation and malfeasance might be uncovered. At a minimum, before citing public comments to justify rulemakings or touting them in testimony, agency officials should make a good faith effort to verify their authenticity. It’s the least they can do.

Regulatory agencies provide a valuable service to the public by issuing and implementing safeguards. It’s essential that they deal in truthful feedback from real people.

Naylor is the financial policy advocate for Public Citizen.