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Government of the Virgin Islands of the United States of America Department of Licensing and Consumer Affairs www.dlca.vi.gov H. Nathalie Hodge Commissioner Testimony Before the 36th Legislature of the Virgin Islands Hon. Avery L. Lewis, Chair Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 Serving Businesses & Assisting, Educating and Protecting Consumers” Golden Rock Shopping Center 3000 Estate Golden Rock, Suite 9 St. Croix, VI 00820-4311 Telephone: 340.713.3522 Administrative Complex “The Battery” St. John, VI 00830 Telephone: 340.727.3303 Property & Procurement Building 8201 Subbase, Suite 1 St. Thomas, VI 00802-5826 Telephone: 340.714.3522 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 2 Good Morning Chairman Lewis, Honorable Senators, Distinguished Members of 1 the 36th Legislature, and the Listening and Viewing Audience. I am Deputy Commissioner 2 Myrna George and I am joined by Matthew Padgett, the Director of Consumer Affairs and 3 General Counsel, Geraldine P. Vaval. Thank you for the opportunity to appear before you 4 today on behalf of the Department of Licensing and Consumer Affairs (DLCA) and 5 Commissioner H. Nathalie Hodge to provide a comprehensive update on the state of 6 DLCA’s ability to provide an update on programs that prevent fraudulent, deceptive and 7 unfair business practices and information to help consumers spot, stop and avoid scams 8 and fraud. Specifically, we will focus on fuel price surveys, the frequency of grocery store 9 price analyses and results, and the status of capital projects. As the agency tasked with 10 protecting the interests of consumers and ensuring fair business practices across the U.S. 11 Virgin Islands, our department remains steadfast in its commitment to enforcing consumer 12 protection laws and providing essential services that promote transparency and 13 accountability in the marketplace. 14 Today, I will outline the consumer protection services that DLCA provides to the 15 public and discuss how these efforts contribute to fair commerce and promote consumer 16 confidence throughout our territory. 17 18 DLCA’s Services for Promoting Fair Business Practices and Consumer Protection 19 Consumer Complaint Resolution and Mediation Services 20 One of the core functions of DLCA is to serve as an intermediary between 21 consumers and businesses when disputes arise. Our Consumer Affairs Division handles 22 complaints relating to deceptive business practices, price gouging (during declared 23 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 3 emergencies and price freeze orders), contract disputes, and other unfair trade practices. 24 Through mediation services provided by our small, but talented and experienced team of 25 Consumer Protection Investigators, we work to resolve conflicts in a fair and timely 26 manner, ensuring that consumers receive appropriate redress while fostering a cooperative 27 relationship with businesses. 28 Over the past year, DLCA has successfully resolved, or forwarded to the 29 appropriate agency, approximately 320 citizen complaints across the territory. In addition 30 to individual case resolutions, we proactively investigate industry-wide concerns regarding 31 business practices and take appropriate regulatory action or make public notifications when 32 necessary. 33 34 Enforcement of Consumer Protection Laws 35 DLCA enforces a variety of laws aimed at safeguarding consumer rights. These 36 include, but are not limited to: 37 1. The Consumer Protection Law. The Consumer Protection Law serves as a 38 safeguard against unfair and deceptive trade practices that could mislead or harm 39 consumers. It establishes guidelines to ensure businesses operate with transparency 40 and integrity, preventing fraudulent claims, false advertising, and 41 misrepresentations about products or services. Through enforcement actions, 42 consumer education, and legal interventions, DLCA actively identifies and 43 addresses violations. By holding businesses accountable for deceptive practices, 44 this law fosters a fair marketplace where consumers can make informed purchasing 45 decisions with confidence. 46 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 4 2. The Price Control Act. The Price Control Act is a critical regulation designed to 47 prevent price gouging, particularly during emergencies such as hurricanes. It grants 48 DLCA the authority to monitor and regulate the prices of essential goods and 49 services, ensuring that businesses do not exploit consumers by imposing unjustified 50 price increases during times of crisis. This act covers necessities such as food, fuel, 51 medical supplies, and building materials, and protecting residents from financial 52 exploitation when access to essential products becomes limited. By enforcing price 53 controls and conducting market surveillance, DLCA upholds economic stability 54 and consumer protection during vulnerable periods. 55 3. Monitoring for Unfair Business Practices. The Unfair Business Practices Act is 56 designed to protect consumers from fraudulent activities, misrepresentation, and 57 contracts that impose unreasonable burdens. This law prohibits deceptive 58 marketing tactics, hidden fees, and unfair terms that businesses may use to take 59 advantage of customers. DLCA plays a vital role in enforcing these regulations by 60 investigating consumer complaints, by taking action against violators, and 61 promoting fair competition. Ensuring that businesses operate with integrity, this act 62 helps maintain consumer trust and prevents financial harm caused by unethical 63 business practices. 64 4. Truth in Pricing Law. The Truth in Pricing Law mandates that businesses provide 65 transparent pricing and uphold their advertised promotions. This regulation ensures 66 that consumers are not misled by hidden costs, unclear labelling, or false 67 advertising. Retailers must display accurate prices on shelves, menus, and 68 promotional materials, allowing consumers to make informed purchasing 69 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 5 decisions. DLCA enforces compliance by conducting inspections, reviewing 70 advertisements, and addressing consumer complaints regarding deceptive pricing 71 practices. This law is essential in promoting honesty in commerce and preventing 72 misleading sales tactics. 73 Through routine inspections, compliance audits, and investigative operations, 74 DLCA actively monitors the marketplace to detect and deter violations of consumer 75 protection laws. These enforcement actions help identify businesses engaging in fraudulent 76 practices, price manipulation, or non-compliance with regulatory standards. Regular 77 oversight ensures that businesses adhere to fair trade principles, fostering a competitive 78 and ethical economic environment. By taking proactive measures, DLCA not only 79 penalizes violators but also educates businesses and consumers about their rights and 80 responsibilities, strengthening overall consumer confidence in the market. 81 82 Price Monitoring During Price Freezes and Emergency Preparedness 83 The Department requires businesses to submit monthly price information on 84 essential goods, including fuel, food, and building materials, to name just a few, to ensure 85 fair pricing across the territory in the event of an emergency order and subsequent price 86 freeze. Once an emergency declaration is issued by the Governor in times of an 87 emergency—such as hurricanes, economic disruptions, or public health crises— DLCA 88 issues a price freeze order and plays a critical role in enforcing price control measures, 89 preventing unscrupulous price hikes or exporting necessary goods that are needed to aide 90 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 6 in recovery or response efforts. If this tedious, but necessary, function did not occur it could 91 result in the exploitation of vulnerable consumers and artificial supply shortages of. 92 By issuing consumer advisories and maintaining price control regulations during 93 times of disaster or economic uncertainty, our efforts help stabilize market conditions and 94 protect residents from financial exploitation during times of crisis. 95 96 Consumer Education and Public Awareness 97 Education is a fundamental pillar of consumer protection. Though, admittedly, our 98 staffing constraints have been a significant impediment to our ability to conduct these types 99 of community engagement activities as regularly as we’d like. Despite this, DLCA actively 100 engages with the public through outreach programs at local schools and assisted living 101 facilities, social media campaigns, and public service announcements to inform consumers 102 about their rights and responsibilities as often as possible. 103 The DLCA remains committed to empowering consumers, supporting businesses, 104 and protecting the public from fraudulent activities. Through community engagement, 105 educational initiatives, and strategic partnerships, the Department has worked diligently to 106 enhance consumer awareness, promote fair business practices, and provide essential 107 regulatory support. From public awareness campaigns to interactive webinars and 108 community fairs, these outreach activities have strengthened the Department’s role in 109 ensuring transparency, accountability, and consumer protection throughout the Virgin 110 Islands. 111 Over the past two years, the Department of Licensing and Consumer Affairs has 112 actively engaged with the community through a variety of educational initiatives, consumer 113 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 7 protection efforts, and business support programs. From celebrating National Tape 114 Measure Day with interactive educational tours to participating in fraud prevention efforts 115 through webinars and public awareness campaigns, the Department has prioritized 116 empowering residents with valuable information. Collaborative efforts with AARP, FEMA, 117 the FTC, and local advocacy organizations have strengthened consumer awareness, 118 particularly in protecting seniors and disaster-affected communities. Additionally, the 119 Department played a vital role in events such as the 2023 Conference on Aging, World 120 Food Day, and National Consumer Protection Week, ensuring that consumers and business 121 owners alike are always equipped with the tools to safeguard their rights. The Department 122 also marked a milestone with its first-ever presence at Agrifest 2025, directly connecting 123 with the community to provide hands-on licensing and regulatory assistance. Currently, the 124 Department is actively planning its Consumer Protection Week 2025 (March 2–8) and 125 Older Americans Month (May 2025) outreach initiatives, aiming to provide valuable 126 consumer education and community engagement opportunities to empower and protect 127 residents across the Virgin Islands. Through these initiatives, the Department has 128 reaffirmed its commitment to consumer empowerment, fair business practices, and 129 regulatory excellence across the Virgin Islands. 130 One of the primary goals for this year is to be more engaging with the public, to 131 host workshops and town hall meetings that allow us to educate consumers on these very 132 important topics such as identifying fraudulent business practices, understanding 133 warranties, consumer contracts, and refund policies and the process for filing consumer 134 complaints and seeking legal recourse when necessary. By empowering consumers with 135 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 8 this knowledge, we will enhance their ability to make informed decisions and protect 136 themselves from unfair practices. 137 138 Business Compliance and Licensing Regulations 139 Consumer protection is intrinsically tied to business compliance. DLCA ensures 140 that all businesses operating in the U.S. Virgin Islands adhere to licensing and regulatory 141 requirements. Additionally, our Consumer Protection and Weights & Measures Divisions 142 conduct regular compliance checks to verify that businesses are following established laws 143 regarding product pricing, advertising, and contractual obligations. This creates a business 144 environment that is both fair and competitive while protecting consumers from 145 unscrupulous actors. 146 147 Weights and Measures 148 The Weights and Measures regulations under Title 12A of the U.S. Virgin Islands 149 Code serve as a fundamental consumer protection mechanism to ensure fairness, accuracy, 150 and transparency in commercial transactions. These laws establish standardized 151 measurement practices for goods sold by weight, volume, or count, safeguarding both 152 consumers and businesses from fraud, errors, or misrepresentation. 153 The law mandates that all weighing and measuring devices used in trade—such as 154 fuel pumps, grocery counter scales, and scales used for packaging labels, such as the scales 155 used in most deli or meat packing applications—must be calibrated and certified to provide 156 accurate readings. This prevents consumers from being overcharged due to faulty or 157 tampered with equipment. The law is particularly crucial in industries such as grocery and 158 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 9 fuel, where discrepancies in weight and volume measurements can have significant 159 financial and safety implications. For example, inaccurately measured fuel at gas stations 160 or produce at a grocery store can lead to substantial economic losses for consumers. By 161 using territory specific standards that can be traced back to the National Institute of 162 Standards and Technology, we ensure a consistent quantity, either volume or weight, is 163 being dispensed or sold no matter who is making a purchase or where the purchase is made. 164 In summary, the enforcement of standard weights and measures helps combat 165 fraudulent business practices, such as short weighting, where customers receive less 166 product than they paid for. Regular inspections by DLCA help detect and correct such 167 violations. Through routine inspections and compliance monitoring, the Division of 168 Weights & Measures conducts routine inspections of businesses and their 169 weighing/measuring devices to ensure compliance with Title 12A. Violators can face 170 penalties, fines, and corrective actions to prevent repeat offenses. These inspections serve 171 as a deterrent against fraudulent practices and should give consumers confidence that the 172 products they are purchasing by weight or volume are accurate to an acceptable degree and 173 consistent across every business under our jurisdiction. 174 175 Clearing Up the Misconceptions 176 It is important to clarify that while DLCA does enforce consumer protection laws, 177 its role is limited to regulatory enforcement related to licensed business compliance, and 178 fair-trade practices. DLCA’s authority includes addressing consumer complaints related to 179 mispricing items, business malpractice, and regulatory violations, but it does not extend to 180 prosecuting criminal offenses such as fraud. The department remains committed to 181 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 10 ensuring a fair and transparent marketplace but does not possess the resources or mandate 182 to conduct criminal fraud investigations. 183 DLCA’s Division of Consumer Protection does not conduct investigations or 184 provide advisement in cases involving fraud as fraud is classified as a criminal offense, and 185 complaints or reports concerning fraudulent activities fall outside of DLCA’s limited 186 jurisdiction. Instead, complainants who wish to report fraud are directed to the appropriate 187 enforcement authorities, primarily the Federal Trade Commission (FTC) or, in some 188 instances, the White-Collar Crimes Unit of the Virgin Islands Police Department (VIPD). 189 This distinction is important, as DLCA’s primary role focuses on regulatory oversight and 190 consumer protection within the framework of business compliance, rather than criminal 191 investigations. 192 When a consumer submits a complaint to DLCA that appears to involve fraudulent 193 activities—such as identity theft, credit card fraud, or any form of willful misrepresentation 194 aimed at securing unlawful gains, the Department refers the complainant to the FTC or 195 other local resources that have the jurisdiction and authority to investigate, pursue and 196 prosecute these criminal allegations. The FTC specializes in addressing fraud-related 197 consumer issues and has the authority to investigate deceptive trade practices on a federal 198 level. The FTC provides consumers with the necessary resources to report fraud, conduct 199 inquiries, and take appropriate legal actions against perpetrators. DLCA does not have 200 investigative authority or enforcement capabilities in these matters, making the FTC the 201 most appropriate agency to handle such cases. 202 In situations where fraud appears to have been committed within the Virgin Islands 203 and has a criminal element that requires local law enforcement intervention, complainants 204 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 11 are instead directed to the White-Collar Crimes Unit of the VIPD. This unit is equipped to 205 handle financial crimes, including embezzlement, wire fraud, and other forms of economic 206 deception that require forensic analysis and legal prosecution. Since fraud cases often 207 involve criminal intent and potential prosecution under Virgin Islands law, DLCA ensures 208 that these matters are promptly forwarded to the relevant law enforcement authorities for 209 further investigation. 210 In addition to clarifying DLCA’s stance on fraud investigations, it is also necessary 211 to address public misconceptions regarding DLCA’s role in price monitoring and market 212 analysis. While DLCA provides a "Shopping Basket" that reflects current pricing of goods 213 at a given time, it does not conduct a "Market Basket Survey" intended for long-term 214 economic analysis. The Shopping Basket is designed to offer consumers insight into the 215 cost of selected goods at specific points in time, but it is not structured for month-over- 216 month or year-over-year comparative analysis. 217 The purpose of the DLCA’s Shopping Basket is to provide transparency in pricing 218 and to inform consumers of the cost of everyday essential goods at various retailers. 219 However, the items included in the Shopping Basket are rotated and changed regularly, 220 which means that the data collected does not allow for direct price comparison across 221 different time periods. This flexibility in selection is intentional, as it enables DLCA to 222 highlight a diverse range of consumer goods and ensure that pricing information remains 223 relevant to current market conditions. 224 For those seeking Consumer Price Index (CPI) information or a formal Market 225 Basket Survey that tracks economic trends over time, the Bureau of Economic Research 226 (BER) is the designated agency responsible for compiling such data. BER conducts 227 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 12 structured analyses that account for inflation, cost-of-living changes, and other economic 228 indicators that impact the financial well-being of consumers in the Virgin Islands. These 229 reports provide an official measurement of economic trends and are the appropriate 230 resource for individuals or organizations interested in understanding long-term pricing 231 fluctuations. 232 It is crucial for consumers and businesses alike to understand the distinction 233 between DLCA’s Shopping Basket and BER’s Market Basket Survey. While DLCA 234 remains committed to consumer advocacy and price transparency, its role does not extend 235 to producing long-term economic data or CPI reports. Misinterpretation of DLCA’s 236 Shopping Basket as an economic indicator can lead to misunderstandings about price 237 trends and market stability. For precise statistical analysis and comprehensive price 238 comparisons, BER’s data should be referenced. 239 DLCA remains committed to its mission of ensuring fair business practices, 240 consumer protection, and pricing transparency. However, its functions are clearly defined, 241 and any inquiries or concerns that fall outside its jurisdiction, including fraud investigations 242 and long-term economic analysis, are appropriately redirected to the relevant agencies. 243 Consumers who require assistance in these areas are strongly encouraged to contact the 244 appropriate authorities to obtain accurate information and proper resolutions. 245 246 Status of Capital Projects and Upcoming Initiatives 247 In addition to our enforcement and consumer protection initiatives, the DLCA 248 remains committed to improving its infrastructure and operational capabilities through 249 strategic capital projects and initiatives. These efforts are essential to enhancing service 250 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 13 delivery, increasing efficiency, and ensuring that our facilities and technology meet the 251 needs of our employees, businesses and consumers across the U.S. Virgin Islands. 252 Facility Upgrades and Expansion – DLCA is exploring opportunities to expand its 253 office footprint to improve operational efficiency and accommodate growing service 254 demands. The modernization of office spaces will support increased staffing needs and 255 facilitate more effective consumer engagement, particularly for the DLCA and the Office 256 of Cannabis Regulation (OCR) staff. 257 Digital Transformation & IT Infrastructure Enhancement. The DLCA recently 258 selected a vendor to redesign its website and implement an upgraded Business Licensing 259 Portal. This enhanced system will streamline application processing, improve turnaround 260 times, and expand the consumer complaint tracking system to provide real-time updates 261 and faster resolution of disputes. 262 Food, Fuel, and Housing Study: Cost of Living Analysis. As part of the Department 263 of Licensing and Consumer Affairs’ (DLCA) commitment to consumer protection and 264 economic transparency, we are actively engaged in research efforts to analyze market 265 conditions affecting the affordability of essential goods and services. One such initiative is 266 the Food, Fuel, and Housing Cost Analysis, which aims to provide a comprehensive 267 assessment of cost trends in these critical areas. 268 A Food and Housing Cost Analysis began in the Virgin Islands in April 2017, but the 269 "First Report" lacked thoroughness due to the unavailability of certain data. Recently, 270 funding has been secured to resume the analysis, with a new performance period beginning 271 on December 31, 2024, and concluding on December 31, 2026. 272 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 14 This renewed analysis will not only focus on the cost of food and construction materials 273 but will also delve into the fuel price trends and costs of other essential goods and services 274 that impact the cost of living, such as labor and energy costs in the territory. By expanding 275 the scope and ensuring the availability of necessary data, the analysis aims to provide a 276 comprehensive understanding of the factors influencing the cost of living in the Virgin 277 Islands. 278 279 Conclusion and Legislative Considerations 280 I want to thank you for allowing our team to clear up these common 281 misunderstandings, by maintaining a clear distinction between its regulatory functions and 282 the responsibilities of other agencies, DLCA ensures that consumers receive accurate 283 guidance, and that fraud cases or economic research inquiries are handled by the 284 appropriate organizations. This approach helps prevent misinformation and ensures that 285 consumers can access the right resources for their specific needs. 286 I’d like to close with the following, we understand that effective consumer 287 protection is a shared responsibility, not only with the legislature and the executive 288 branches of government, but with every individual consumer throughout the Territory. 289 Whether you reside here or are here on business or leisure, we all share in the responsibility 290 of understanding our rights as consumers and reporting any activity that you feel may be 291 in violation of the laws of the US Virgin Islands. DLCA remains committed to working 292 alongside the Legislature to enhance our existing laws and improve enforcement 293 mechanisms. As we look ahead, we welcome discussions on strengthening consumer 294 Testimony before Committee on Government Operations, Veterans Affairs, and Consumer Protection February 24, 2025 15 protection policies, increasing funding for enforcement initiatives, and leveraging 295 technology to streamline complaint processing and market monitoring. 296 We appreciate the support of Governor Albert Bryan Jr., the Bryan/Roach 297 Administration and the Legislature in these efforts and stand ready to provide any 298 additional information necessary to advance consumer rights in the U.S. Virgin Islands. 299 Thank you for the opportunity to testify today. We are happy to answer any questions you 300 may have. 301