Overview of the Office of Consumer Affairs and Business Regulation

This section describes the makeup and responsibilities of the Office of Consumer Affairs and Business Regulation.

Overview

The Office of Consumer Affairs and Business Regulation (OCABR), within the Executive Office of Housing and Economic Development, was established under Section 1 of Chapter 24A of the Massachusetts General Laws and operates under the supervision and control of an undersecretary appointed by the Governor. According to OCABR’s Internal Control Guide,

The core mission of the Office of Consumer Affairs and Business Regulation (OCABR) is to inform, protect and advocate for consumers and assure fair and sound regulation of business and professionals. In advancing its mission OCABR continually works to strike a balance between the needs of consumers and the needs of businesses and professionals.

OCABR staffs various consumer hotlines; investigates consumer problems; publishes educational brochures, alerts, and reports; conducts surveys of consumer needs; establishes programs and services to help consumers understand their rights and responsibilities in consumer transactions; recommends and implements consumer protection policies; and monitors the marketplace to promote fair and honest competition.

OCABR supervises five regulatory agencies:

• Division of Banks (DOB): DOB is the chartering authority and regulator for financial service providers in Massachusetts, which include state-chartered banks, credit unions, and more than 10,000 mortgage lenders and brokers. DOB performs routine examinations of all state-chartered banks and licensees for compliance with consumer protection laws and fair lending requirements and, as necessary, conducts special investigations at these financial service providers.
• Division of Insurance (DOI): DOI administers the Commonwealth’s consumer protection laws and regulations regarding the insurance industry. To meet its responsibilities, DOI performs a variety of tasks, such as monitoring the financial health of insurance companies, approving insurance rates and forms, and coordinating the takeover and liquidation of insolvent insurance companies as well as the rehabilitation of financially troubled companies. DOI also investigates and enforces state laws and regulations pertaining to insurance and responds to consumer inquiries and complaints.
• Department of Telecommunications and Cable (DTC): DTC is responsible for overseeing compliance with laws and regulations affecting telephone and cable providers as well as their customers in Massachusetts and fostering competition in the cable industry. It is also responsible for ensuring that cable customers receive quality cable services at reasonable rates.
• Division of Professional Licensure (DPL): DPL oversees 28 boards of registration, as well as the Office of Public Safety and Inspections and the Office of Private Occupational School Education. It licenses and regulates more than 580,000 individuals, businesses, and schools that engage in more than 150 trades and professions in Massachusetts.
• Division of Standards (DOS): DOS enforces regulatory accuracy requirements and standards related to weight and measurement devices often used in the sale of food, fuels, and other products. DOS is responsible for inspection of all fuel-dispensing equipment for required markings pertaining to grade and brand and for regulations regarding the sale of gasoline, as well as for the setting of standards for oils and antifreeze. DOS also performs a variety of other functions, such as testing and approving coin-operated devices; licensing auctioneers, transient vendors, and motor fuel and oil retailers; and registering auto damage repair shops. It also enforces laws and regulations related to item pricing.

In addition, OCABR oversees the state’s Lemon Laws¹ and Lemon Law arbitration between consumers and sellers, data breach reporting, the Home Improvement Contractor (HIC) Program, and the Do Not Call Registry.

OCABR received state appropriations totaling $1,235,222 and $1,608,890 for fiscal years 2018 and 2019, respectively.

HIC Program

The HIC Program was established in 1992 by Chapter 142A of the General Laws. Under this statute, contractors, partnerships, and corporations in the Commonwealth must be registered with OCABR as HICs if they perform residential contracting services in certain trades² as either contractors or subcontractors. According to Section 10 of Chapter 142A of the General Laws, to register with OCABR as an HIC, an applicant must submit to OCABR an application that includes information such as the following:

(a)  applicant’s name, home address, business address . . ., and social security number;

(b)  the names and addresses of any and all owners, partners or trustees of an applicant including, in case of corporate entities, the names and addresses of any and all officers, directors and principal shareholders . . .

(c)  whether the applicant has ever been previously registered in the commonwealth as a contractor or subcontractor . . . and whether his registration has ever been suspended or revoked.

Contractors can apply for HIC registration with OCABR online, by mail, or in person at OCABR. All application information is processed through the HIC registration database system, which interfaces with the agency’s website and can be used by consumers for such things as searching for registered HICs. A third-party vendor that OCABR has hired to process fee payments also has access to the system.

HIC Registration and Residential Contractor’s Guaranty Fund Fees

In order to apply for, reapply for, or renew their HIC registrations with OCABR, residential contractors must pay HIC registration fees (application, renewal, and reapplication) and, when required, a Residential Contractor’s Guaranty Fund (RCGF) fee. When initially applying to register with OCABR as an HIC, an applicant must pay an application fee, which is deposited in the HIC Fund that is used for program expenses, as well as an RCGF fee based on the number of employees the applicant has (see table below). This fee is deposited in the RCGF, which is used to compensate homeowners for substandard work performed by registered HICs. In addition, registered HICs must renew their registrations and pay renewal fees every two years. Also, if an HIC fails to renew registration within the timeframe established by OCABR regulations (see Finding 2), the HIC must reapply for, rather than just renewing, the registration and pay a reapplication fee (equal to the application fee) and RCGF fee. The following tables detail HIC registration and RCGF fees charged by OCABR during the audit period.

HIC Registration Fees

Type of Application	Fee	Number of Registrations	Fees Charged
Application	$150	7,875	$1,181,250
Renewal	$100	18,842	1,884,200
Reapplication	$150	4,414	662,100
Total	–	31,131	$3,727,550

 

RCGF Fees

Number of Employees of the Applicant	Fee	Number of Registrations	Fees Charged
0–3	$100	11,446	$1,144,600
4–10	$200	614	122,800
11–30	$300	167	50,100
31+	$500	62	31,000
Total	–	12,289	$1,348,500

 

HIC Arbitration Program

The HIC Arbitration Program helps resolve disputes between homeowners and registered HICs. According to OCABR’s website,

To qualify for arbitration, homeowners must be able to prove that:

• there was a written contract for the job;
• the contractor was registered as a Home Improvement Contractor on the date the contract was signed;
• the contract was for improvements, repairs, renovations, alteration, or additions to a preexisting owner-occupied residence with no more than 4 units;
• the property or residence was located in Massachusetts;
• the property is your primary residence; and
• your Request for Arbitration will be filed within two (2) years of the contract date.

A homeowner who applies and qualifies for the HIC Arbitration Program is charged an arbitration fee, which ranges from $150 to $850, depending on the claim amount. A homeowner may also be charged additional fees if a hearing is extended beyond four hours, but may be reimbursed for all fees if the case is found in his/her favor.

During our audit period, 172 arbitration claims were filed. Twenty cases (some opened during the audit period, some opened previously) were closed during the audit period, totaling $520,976 awarded by arbitrators or courts from HICs to homeowners.

RCGF

Section 7 of Chapter 142A of the General Laws established the RCGF within OCABR to compensate homeowners up to $10,000 for actual losses they may have incurred from work done by an HIC, or an HIC’s employee or subcontractor, that is found by a court to be substandard or done in a manner that violates any consumer protection law or regulation. During our audit period, OCABR made 65 payments, totaling $535,480, to consumers for eligible RCGF claims. If a homeowner files a complaint against an HIC and receives a payment from the RCGF, the HIC is responsible for reimbursing the fund for the payment. According to OCABR’s website, for a homeowner to apply for compensation from the RCGF, the following criteria must be met:

• There was a contract for the job
• The contractor was registered with the Office of Consumer Affairs and Business Regulation at the time the contract was signed
• The contractor—not the homeowner—secured the building permit
• The contract was for work on a pre-existing 1–4 family residence in Massachusetts that is the owner’s primary residence
• You filed for arbitration within two years of the [date] of the contract and satisfied the eligibility requirements for arbitration
• A court judgment or arbitration award in the homeowner’s favor has been issued, and all “reasonable efforts to collect” the judgment or award have been exhausted
• A Fund application was filed within six months of the arbitration award or court judgment

The RCGF account activity during the audit period was as follows.

RCGF Account Activity for Fiscal Years 2018–2019

Balance as of July 1, 2017	$1,102,293
RCGF Fees	1,348,500
Interest Earned	12,347
Recovery on Intercept*	34,779
Administrative Fines (OCABR)†	139,192
RCGF Reimbursements	87,621
Claims Paid	(535,480)
Balance as of June 30, 2019	$2,189,252

*     According to the website of the Office of the Comptroller of the Commonwealth, an intercept is an “an automated process that matches eligible payments to delinquent debt for individuals and organizations that function both as vendors for and customers of the Commonwealth of Massachusetts.” This line item represents amounts received by OCABR through the intercept process.

†     Administrative fines are assessed by OCABR’s HIC Program coordinator against HICs based on complaints filed against them.

1.      The Lemon Laws are intended to protect consumers who have leased or purchased vehicles with serious defects.

2.     Examples of these trades include carpentry, masonry, painting (exterior), and plastering, as well as residential contracting services such as installation of roofing, siding, solar panels, in-ground swimming pools, and windows.

Date published:	March 10, 2021