“The truth is rarely pure and never simple.”―Oscar Wilde
The date was Feb. 11, 2003. It was colder than usual in New York City that winter morning when FTC Chairman Tim Muris stepped to the podium to address the Cable Television Advertising Bureau. Unbeknownst to those in the audience, things were about to get much chillier. Chairman Muris called everyone’s attention to the screen over his right-hand shoulder and proceeded to show an excerpt from an infomercial for “The Enforma System.” The segment featured a succession of delicious, mouth-watering foods like eggs, bacon, sausage, French-fried potatoes, fried onion rings, hamburgers, and lasagna; thin models in bathing suits and claims like, “You can eat anything you want and never, ever, ever have to diet again.”
Now, while this particular advertisement (a.k.a., the “Steve Garvey infomercial”) had already been the subject of settlement agreement with the Commission a few years earlier, the point made by Chairman Muris was crystal clear: The proliferation of egregious claims for weight loss products (and other products featured in direct response advertising) had reached a tipping point, and if the industry wasn’t going to address this growing endemic, you could (in no uncertain terms) be sure as hell that the FTC was prepared to.
All of this brings me to the news announced this past June that probably didn’t garner the attention it should have—that the FTC was mailing a total of $6.3 million in checks to consumers who purchased The Weight Loss Cure ‘They’ Don’t Want You to Know About, written by Kevin Trudeau, the guy who became the poster child for everything that was wrong about direct response advertising and also the man who became the unintentional catalyst for an industry turning itself around.
Now, of course, in his remarks to the Cable Television Advertising Bureau, the Chairman did not mention Kevin Trudeau specifically by name, but then again, he didn’t really have to. By 2003, the ongoing infomercial shenanigans of Kevin Trudeau were well documented, as was his ongoing battle royale with the FTC. In 1998, he settled FTC charges that six infomercials (the Mega Memory System being one) in which he developed and appeared in were misleading. He agreed to pay $500,000 in consumer redress and establish a $500,000 escrow account or bond to assure future compliance with the law. However, the settlement did little to deter the infamous infomercial king as he continued to produce and participate in misleading infomercials and portray himself as a victim of government harassment. In fact, a mere four months after Chairman Muris spoke to the Cable Television Advertising Bureau, the FTC filed a complaint against Trudeau in the U.S. District Court in the Northern District of Illinois, alleging Trudeau and several other defendants disseminated claims that a product called Coral Calcium Supreme could treat or cure cancer, multiple sclerosis and heart disease were deceptive. Indeed, the flurry of regulatory sparring between the Commission and Trudeau would continue for years.
Not surprisingly, the residual effect of Trudeau’s (and the several protégés he spawned) propensity to take liberties with the fundamental premise of truth in advertising cast aspersion and brought scrutiny to an entire industry. Public confidence and regulatory confidence in direct response advertising was eroding quickly and it was hard not to foresee a significant chill in the way that marketers would be conducting business in the near future.
As the saying goes, the darkest hour is just before the dawn and Kevin Trudeau represented the darkest days in the history of direct response advertising. Fortunately, members of the direct response industry rallied. They understood the smoke signals coming from the FTC, and they were not going to let a few wayward hucksters destroy the entrepreneurial spirit and opportunity that was a hallmark of direct response advertising for over two decades. No, the industry was going to fight back.
One thing that the mainstream members of the industry had going for themselves was strong leadership and a trade association in the Electronic Retailing Association (ERA) that was willing to step forward and take responsibility for its own conduct. It knew that it needed to police itself and do it in significant way. So the industry, through the tireless efforts of ERA (and after some internal consternation), took the brave leap of faith and turned to an independent outside organization, i.e., the Advertising Self-Regulatory Council (ASRC) and the Council of Better Business Bureaus, Inc., to administer a stand-alone self-regulatory forum for direct response advertisers to expeditiously resolve direct response advertising inquiries and demonstrate to regulators such as the FTC and the state attorneys general that their industry was committed to responsible and meaningful advertising self-regulation. Let me emphasize: not superficial, non-transparent self-regulation, but responsible and meaningful self-regulation. And from those humble origins the Electronic Retailing Self-Regulation Program (ERSP) was born.
Now, was the expectation that a robust system of advertising self-regulation would motivate a recidivist like Kevin Trudeau to see the light? Probably not. After all, the success of an effective system of self-regulation is predicated on the voluntary cooperation of the marketers, and it was abundantly clear early on that the unscrupulous marketers couldn’t be bothered adhering to ethical business practices, particularly those imposed by an outside third party. But what ERSP could do (and did do) was identify the uncooperative marketers and refer them to the appropriate government agency who, with a wide array of enforcement tools at its disposal, were better equipped to pursue recalcitrant advertisers. To be sure, one of the great utilities of effective advertising self-regulation is that it allows the government to properly allocate its limited resources to pursue the nefarious perpetrators of fraud and deception.
As those industry members who weathered the storms of the late 1990s and early 2000s recognize, through self-regulatory initiatives such as ERSP, the direct response community has come a long way to recapture the consumer and regulatory confidence that exists today. Ironically, we all owe a strange debt of gratitude to Kevin Trudeau, for compelling the industry to engage in a necessary and ultimately cathartic self-examination that in the long run has made the direct response advertising world a better place.
Photo Credit: ABC News
Peter Marinello is director of the Electronic Retiling Self-Regulation Program (ERSP).