Consumer Federation of America

The Consumer Federation of America (CFA), based in Washington, D.C., is the nation's largest consumer [Page 421]advocacy group. It is an umbrella of organizations and includes labor unions; state and local consumer organizations; and senior citizen, low-income, labor, farm, public power, and cooperative organizations. The initiative for founding the CFA in late 1967 came from a small group of consumer activists primarily from the labor unions, the President's Consumer Advisory Council, and the Consumers Union. At the time of its founding, it reported having 140 affiliates. By 2005 that number had climbed to 300. The CFA claims to indirectly have some 50 million members, a number that permits it to be a “voice for virtually all consumers.”

The CFA was originally intended to be an information clearinghouse for its members. Lobbying was to be left to individual members. However, while CFA still has a substantial fact-finding role, it has evolved into a major lobbying force on Capitol Hill. Its staff members frequently testify before Congress on consumer-related matters. Today, its mission explicitly includes representing consumer interests before Congress and federal agencies as well as assisting its state and local members in their activities in their local jurisdictions. Other activities include commissioning surveys on consumer attitudes and product safety. The CFA also analyzes the voting records of members of Congress and produces voter guides at election time.

According to economic analysis, a genuine massbased consumer organization cannot exist. That is because the benefits it provides are public goods. Since, by definition, public goods are available to all members of the group (here consumers) irrespective of whether they contribute to providing them, it is in the rational self-interest of all consumers to free ride. But if all members of the group free ride, then the public goods won't be supplied at all. This is the problem of collective action identified by Mancur Olson: Unless the number of individuals in a group is quite small, or unless there is coercion or some other special device to make individuals act in their common interest, rational, self-interested individuals will not act to achieve their common or group interests. It is not simply a question of organizing for political activity. Individual consumers remain rationally ignorant of the policies and programs that exploit them because it is not in the self-interest of any consumer to expend the resources to obtain such information.

Thus, the CFA provides a natural experiment for testing Olson's theory of collective action. How has the CFA overcome Olson's free rider problem? First, the CFA does not organize dispersed consumers. Its membership doesn't consist of 300 million consumers but consists of some 300-odd organizations. Second, the CFA is a service organization that provides selective incentives to its members in the form of lobbying and technical expertise.

For these reasons, the free rider problem is greatly reduced—but at a potential cost. The interests of CFA's membership may diverge from the interests of consumers. In case of conflicts, where do CFA's loyalties lie? These potential or actual conflicts of interest have provoked conservative criticisms that public interest groups such as the CFA are in reality lobbies for economic and ideological special interests.

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