CFA Urges Scrutiny Of All Conversions

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The Consumer Federation of America has adopted a resolution urging "careful scrutiny" of any conversion to an investor-owned structure from a cooperative structure.

In its resolution, the CFA said that co-op conversions "need careful scrutiny," and suggested that legislative or regulatory changes might be necessary to assure full disclosure and fair votes when cooperatives consider switching to investor-owned status.

The resolution further called on co-ops to invest in education of their members on the benefits on cooperatives.

"Consumers often lose two ways when cooperatives convert," said the resolution, passed at the recent Consumer Federation of America annual meeting. "First they lose control of a business they formerly owned. Second, they pay more for goods and services when the goal is profit, rather than member service."

The resolution goes on to call for consideration of legislative and regulatory changes "to ensure that consumer-members have full information about the advantages and disadvantages of conversion, about potential benefit to management, and to ensure democratic voting processes."

"Conversion is a member right," said Paul Hazen, president of the National Cooperative Business Association (NCBA), a CFA member that offered the resolution. "But it should only be exercised with full disclosure of the pros and cons and under true democratic processes."

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