Maintaining a consumer watchdog’s fearsome bite

Consumer Reports President & CEO Marta L. Tellado leads a nonprofit consumer protection enterprise whose influence and legacy are unparalleled in the annals of U.S. commerce.
Maintaining a consumer watchdog’s fearsome bite
Interim Dean Ann Olazabal (left) and Consumer Reports President and CEO Marta L. Tellado (right).

Marta L. Tellado, president and CEO of Consumer Reports, recently stopped by the University of Miami Patti and Allan Herbert Business School to discuss Consumer Reports’ unique role as a gadfly organization that’s been testing products and producing investigative journalism for consumers since 1936.

“What we’re looking at now is a digital landscape and a digital marketplace where the rules and protections are not keeping up with the pace of innovation,” Tellado said onstage at Storer Auditorium, seated beside Miami Herbert’s interim dean, Ann Olazabal. “And that’s a big challenge for us as a consumer rights organization, and for us as consumers.”

To help Miami Herbert better appreciate the issues Consumer Reports focuses on, Tellado shifted her focus to something virtually every audience member was familiar with: Television sets.

“A lot of smart TVs are collecting data about you,” Tellado cautioned. “About what you’re watching, what you’re listening to, even what you’re saying to each other as you’re watching television. And when you get it from the manufacturer, it’s set to a default setting that maximizes the manufacturer’s ability to learn about you and your watching habits. Most consumers don’t know that, and they leave the setting as is.

“So, we created what we call a digital standard, where none existed,” Tellado continued. “We said, `In order for you to make smart choices about your television, here are the things you need to know. So as soon as you set a standard–you learn this in business school–you start to create a race between who can build the better, more secure television. We started getting calls from the likes of Samsung and others, saying, `How should we do that, how should we test that?’”

Holding a Ph.D. in political science from Yale University, Tellado had been the Ford Foundation’s VP for global communications and had worked for several think tanks in Washington, D.C., prior to joining Consumer Reports in 2014.

“We still continue, to this day, to be one of the top sources of information when you are making a decision about really big purchases that are consequential to you,” Tellado said of Consumer Reports, which is headquartered in Yonkers, New York. “We have a state-of-the-art test track, 375 acres, in rural Connecticut where we test cars.

“We have a 25-acre campus in Westchester, New York with about 60 labs where we do a lot of the testing for other products,” Tellado added. “And we also have an office in Washington, D.C., because we investigate, advocate, and also work on policy to really start to codify some of the problems we do find in the products that we see and that we test.”

Along with being responsible for the aforementioned assets, Tellado guides a workforce of roughly 600 employees.

“Let’s get into why we even needed a place like Consumer Reports back in the day,” Tellado said, of an organization that was known as Consumers Union prior to 1942. “It’s no accident Consumer Reports kind of emerged at the height of the advertising industry. It emerged because advertising plays an enormous role in educating consumers, and in shaping consumer demand in many ways.

“But at the beginning, it was also a lot of snake oil, and we were getting sold a lot of things that didn’t live up to the promise of what you were being told,” she said. “And that’s the way a bunch of engineers got together and started testing products and created a magazine and the magazine took off. People wanted advice on what was worth their money, their hard-earned dollars. They also wanted a source that did not support advertising.

“One of the things people don’t know about us is that we don’t take any advertising whatsoever,” Tellado disclosed. “So, ninety percent of our revenue comes from products and services that people get from their membership. It’s an ad-free zone. And with a lot of our competition out there, that’s not the case.”

With a website and a magazine at its disposal, Consumer Reports is funded through reader subscriptions, along with independent grants and donations. Last year, investigative work conducted by Tellado’s organization prompted the Federal Trade Commission to fine digital healthcare app Good Rx $1.5 million for unauthorized sharing of users’ personal health information.

“We are independent, nonpartisan and we are very rigorous about the data,” Tellado said. “And we have a legacy of trust that we have earned, so we can sit down with regulators and say, `Look what we found!’ And we do get an audience and we are trusted and our voice does matter.

“Who checks apps for security and privacy?” Tellado asked rhetorically. “Nobody!”

She mentioned that last month, Consumer Reports called on a company that makes products for infants and preschoolers, Fisher-Price, to recall rockers that Consumer Reports linked to scores of infant and toddler deaths. Fisher-Price complied with the recall demand within 24 hours.

Tellado, whose parents emigrated to the United States from Havana, Cuba, said she and her nonprofit organization are currently looking into a plethora of consumer-related issues, including; fatal accidents associated with self-driving vehicles; peer-to-peer payment apps that fail to make you whole should you send money to the wrong recipient; the potential negative impacts artificial intelligence could have on consumers.

To fight companies that collect and sell consumers’ online information, “We created an app that’s available through Apple, as well Android, and it’s called Permission Slip,” Tellado said proudly. “It’s free and you download it and it’s really a way to put power back in your hands. With the tap of one finger, you can tell a company – stop tracking! I want to be out of your database.”

As Tellado neared the end of her remarks, interim dean Olazabal asked if she had any career advice for Miami Herbert’s students.

“There is no tradeoff in doing right by consumers and making a profit,” Tellado answered. “We need a marketplace that puts consumers first. I would love it if the next generation of entrepreneurs doesn’t fight that principle and just embraces it and kills the competition in the process.”