Advertisers: A Nation Turns Its Lonely Eyes to You!

The May/June 2017 issue of the Electronic Retailer, a publication for direct response advertisers, included the below article from ERSP Director Peter Marinello:

It’s hard not to wonder what the great Thomas Jefferson would make of today’s ongoing assault on truthful speech in contemporary society. It was, after all, our third president who was responsible for the concept of holding truth “to be self-evident” and who once noted that “honesty is the first chapter in the book of wisdom.” It’s a good bet that Jefferson—pretty much like all of us—would be exasperated with the reckless disregard of one of our most cherished principles: Providing our fellow man with truthful and accurate information.

While taking liberties with the truth is nothing new, the lack of accountability we have come to expect from purveyors of the falsehoods has become downright unsettling. At what point did we become so forgiving with our demand for the facts? Since when did we become immune to influencers not disclosing material information that is so pivotal to our thought processes? 

A few weeks ago, Time magazine presented us with one of its more disconcerting cover stories in recent memory, asking “Is the Truth Dead?” The story mused that at no time in our country’s history have we provided others such great latitude in their descriptions of factual circumstance. 

As someone who has worked in the world advertising self-regulation for over two decades, I recognize that I may be overly sensitive to the expectation of someone having, at a minimum, a reasonable basis for factual assertions that are intended to influence public decision-making. After all, it has long been the mantra of advertising self-regulation to ensure that product claims are properly supported and disseminated “truthfully and accurately” to consumers. 

So while I’m taken aback by the cavalier approach some people are taking toward their responsibility to provide reliable, straightforward, and factual information to their audiences and the low threshold of expectations we have afforded these speakers, I am heartened by a recent report that indicates an unlikely channel of expression is garnering increased trust among members of the public: advertising.

In a March 2017 survey by YouGov, an online polling company that provides comprehensive market intelligence on a range of industry sectors, internet users who see ads at least once a month were asked if they trust the advertising they see, read, or hear. According to the results, 61 percent of respondents 18 and older answered in the affirmative—an increase of 11 percentage points from three years ago, when half said they didn’t trust advertising. 

But the results didn’t stop there. In addition to finding increased trust in advertising, 72 percent of the survey respondents also indicated that “they would be more likely to say they feel the ads they encounter are ‘honest,’” which is 15 percent higher than the responses to the same question in 2014.

The results of the YouGov survey were surprising in light of historically low levels of trust expressed in surveys by Gallup. Its annual polls have indicated a marked level of diminished trust in many U.S. institutions including churches, banks, the press, and Congress over the past 10 years. Overall, the average confidence in institutions had fallen to 32 percent in 2016—down from 43 percent in 2004. Conversely, a high level of trust in advertising has trended slightly upward in each of the past three years and has stayed fairly constant over the past decade.

A study conducted by MarketingSherpa last October got even more granular with respect to consumer trust in advertising. According to results obtained from 2,400 respondents, almost eight out of 10 respondents said they trust print and television ads when making a purchase decision. However, the news wasn’t nearly as positive for digital and mobile channels, which were trusted by just 39 percent of respondents. 

What these numbers suggest is that amidst eroding trust in various institutions and professions across this great country, the peoples’ faith that advertisers and marketers are disseminating truthful information has hardly waned over the last few years and, if anything, has increased slightly. 

Before we begin celebrating and patting each other on the back, however, it’s hard to ignore that respondents still placed advertisers on the low end of the totem pole with respect to honesty—well below some vocations that are often more ethically suspect among consumers, including stockbrokers, senators and, yes, lawyers. Interestingly, members of Congress were listed as the least honest of all professionals. 

Although it would be wrong to conclude that in times of great societal consternation about the faith and belief in many of our cherished institutions that consumers are turning to advertising as a beacon of truthfulness and veracity, it is important to note that trust in advertising has remained unchanged. Further, as the public searches desperately to fill the void of honesty and integrity that that has been woefully lacking among our leaders in business and politics, an opportunity is presenting itself for those of an entrepreneurial spirit. 

Not many professions seize the moment like direct response advertisers do. So in these times of great uncertainty, we at the Electronic Retailing Self-Regulation Program (ERSP) call on the advertising industry to double down on self-regulation and join us in our neverending quest to reinforce consumer confidence in the messages you communicate to the public.

ERSP Recommends Intellibiz Modify Certain Claims for Real Estate Education Program; Company Agrees to Do So

The Electronic Retailing Self-Regulation Program (ERSP) has recommended that Intellibiz modify or discontinue certain claims for the “Simple Man’s Guide to Real Estate” investing course.

ERSP is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus, Inc. The marketer’s advertising came to the attention of ERSP through an anonymous competitor challenge. 

ERSP reviewed online advertising claims for the real estate investing course, including:

• "Give me 30 minutes and I guarantee I can teach anyone how to make at least $5,000 in 14 days" - Bill Vaughn
• “Earn a minimum of $100,000 each and every year you use our program, working only part-time, or we will send you a check for double the purchase price, no questions asked.”
• “The only COMPLETE Real Estate Investor Training Program Outperforming every other real estate investing course since 1989”
• “Best guarantee in the business!”
• “Homero Guerrero pocketed this certified check for $10,000 in less than 2 weeks (wholesaling)”
• “Angela Pockets $150,000 On First Deal”

ERSP was also concerned about the omission of clear and conspicuous disclosures concerning the typical results consumers can generally expect to achieve.

Although ERSP was not troubled by claims describing the general performance methods included in the advertised real estate investment program, ERSP found that the specific quantified earnings created real income expectations for consumers that required substantiation and could not be adequately qualified by a single disclosure stating, “Results may vary from one transaction to another.”

In response to ERSP’s initial inquiry, the marketer addressed certain concerns raised by ERSP.  ERSP recommended that the marketer discontinue earnings and performance claims presented in a comparative context, although ERSP did agree with IntelliBiz that its “Best guarantee in the business!” claim would be interpreted by consumers as statement of puffery.

Finally, ERSP recommended that the marketer clearly and conspicuously disclose additional qualifying information when communicating earnings representations using consumer testimonials to provide more clarity to consumers regarding generally expected results.

The company, in its marketer’s statement, said that it is “in the process of substantially revising our advertising and continue to improve our consumer messaging to be as truthful, accurate, clear and conspicuous as possible.”

ERSP Recommends Rich Dad Education, Inc. Modify Certain Testimonials Claims for Real Estate Education Program

The Electronic Retailing Self-Regulation Program (ERSP) has recommended that Rich Dad Education, Inc.,  modify or discontinue certain claims made in student testimonials featured at the  Rich Dad Education website.

ERSP is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus, Inc. The marketer’s advertising came to the attention of ERSP through an anonymous competitor challenge.

ERSP reviewed advertising claims that included:

• “Rich Dad Education's Free Workshops are eye-opening, 2-hour sessions with the definite potential to change your life for the better!”
• "FinFreedomBound – Profit: $72,500”
• “WholesalePro – Profit: $20,383”

ERSP also reviewed claims made during free live seminar events, including:

• Claims that the presenter would teach consumers how to do a wholesale real estate deal and make $10,000 in the next 60 days

ERSP was primarily concerned with the specific quantified profits earned by former and current students that are being featured on the “Real Estate Deals” tab of the website. ERSP noted that there appear to be two different categories of deals – “Deals of the Month” and “Most Recent Deals.” The only apparent distinction between the two categories is that the “Most Recent Deals” contains an asterisk that leads to a disclosure at the bottom of the webpage. With respect to the “Deals of the Month” category, there is no apparent accompanying disclosure language to indicate whether or not these particular results are typical, and, if not, a disclosure of the amount of money they may expect to earn from using the program.

In general, when reviewing direct response marketing in the real estate investing industry, ERSP takes a broad approach and looks at the messages communicated as a whole, across all medium of marketing. Generally, the key issue before ERSP in this particular product category is whether the advertising at issue conveys specific express or implied earnings expectations to consumers, aside from the general message that they could earn money using the techniques outlines by the program.

In this instance, ERSP noted its concern about the lack of any clear and conspicuous disclosures concerning the typical results consumers can generally expect to achieve from using the product.
ERSP as well determined that the performance claims that formed the basis of inquiry did not communicate any specific express earnings expectations for consumers besides the general message that they can earn money using the techniques taught at the Rich Dad Education program.

ERSP acknowledged that the marketer possesses survey results to demonstrate that students of Rich Dad do indeed experience success. However, ERSP noted that the potential for consumer uncertainty exists because the disclosure in the advertisement notes that the stated results are predicated on the purchase of advanced training courses and this may not be apparent to a consumer who is simply interested in the free live event and the possibility of earning supplemental income.

ERSP recommended that the marketer refrain from making quantified earnings claims without clearly and conspicuously disclosing what students of the program can typically expect to earn. ERSP additionally recommended that Rich Dad discontinue the use of such unverified testimonial claims in its advertising material and at free live seminars.

The company, in its marketer’s statement, said that it “takes seriously our obligations to our students and the consuming public and strive to be honest, open, and in compliance with our legal obligations” and that it “has removed the ‘Real Deal from Real Estate Investors in Real Estate’ webpage from its website for reasons independent of ASRC’s Review and it is our present intention not to host such a page on our website in the future whereby it could be construed that Rich Dad Education was making implied claims regarding the amount of monetary success achievable by our students without ensuring that all appropriate disclaimers were provided.”

ERSP Finds Guthy-Renker Can Support Performance Claims for “Cold Plasma Sub-D”

The Electronic Retailing Self-Regulation Program (ERSP) has determined that Guthy-Renker can support performance claims for Cold Plasma Sub-D, a topical cream intended to sculpt and tighten the appearance of skin along the chin and jawline.

ERSP is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus. The marketer’s advertising came to the attention of ERSP pursuant to its ongoing monitoring program.

ERSP reviewed broadcast and online advertising claims for Cold Plasma Sub-D, including: 

• “Results you can expect to see [are]: Visibly tightening of the appearance of sagging, loose skin and improved appearance of double chin”
• “Visibly more crisp appearance of the chin and jawline, imparting an overall more youthful looking face"
• “Visibly improved appearance of lines and wrinkles on the neck and décolletage with noticeable improvement in overall skin texture”
• “Sub-D is specifically formulated for the area called the submandibular. Often neglected, the skin in this area has unique needs and Cold Plasma Sub-D helps tackle the most common signs of aging on the chin, jawline, neck, and décolleté."
• “I saw results within a week.”

As support for the performance and establishment claims at issue, the marketer submitted the results of consumer usage studies conducted on the product itself. Guthy-Renker also provided ERSP with several articles on the benefits of the individual ingredients in Cold Plasma Sub-D contained in the product formulation as support for its position.

While ERSP did conclude that, based upon the collective materials in the case record, the marketer provided adequate support for its general performance claim that specified the specific benefits from using Cold Plasma Sub-D, ERSP determined that it would be material for consumers to know that the claim was based on a consumer usage study and, accordingly, this information should be disclosed conspicuously, in close proximity to the claim.

ERSP noted Guthy-Renker’s voluntary modifications to the two consumer testimonials at issue in the subject matter (“After six weeks, my jawline appeared more defined and the sagging, loose skin under my chin is tighter and has a more youthful appearance" and “I saw results within a week.”). Although the marketer maintained that the depiction of product performance after one week was not a core claim in the advertising, ERSP did not agree. It was concluded that the communication of product performance that can be typically expected by consumers is a fundamental and pivotal component of the Cold Plasma Sub-D advertising. ERSP also determined that the marketer’s commitment to voluntarily modify the consumer testimonial attesting to the expected results “within a week” of using Cold Plasma Sub-D to more clearly communicate the limitations of the consumer usage study was warranted. 

The company, in its marketer’s statement, said, “Guthy-Renker is very pleased with ERSP’s determination that all of the challenged claims for Cold Plasma Sub-D are substantiated, and that the changes Guthy-Renker voluntarily agreed to make in relation to certain disclaimers are appropriate. Guthy-Renker is a long-time supporter of the self-regulatory process and appreciates ERSP’s review.”

ERSP Finds La Lumiere Can Support Certain Claims for ‘illuMask’ Acne Treatment, Recommends Marketer Modify Certain Claims

The Electronic Retailing Self-Regulation Program (ERSP) has determined that La Lumiere, LLC, can support performance claims for illuMask, a device intended to help treat acne. However, ERSP recommended that the marketer clarify its money-back guarantee claims.

ERSP is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus. The marketer’s advertising came to the attention of ERSP pursuant to its ongoing monitoring program.

ERSP reviewed broadcast and online advertising claims for illuMask, including:

• “Get clear and stay clear."
• “Just …put on the mask and get clear.”
• “Get a clearer complexion and fewer breakouts with the illuMask Anti-Acne Light Therapy Mask.”
• “Bringing the Power of Light Therapy Home”
• “Safe, effective and effortless treatment for less than a dollar a day.”
• “Blue light energy kills the light sensitive P. acnes bacteria on and below the skin surface while the red light boosts your natural skin cell turnover and healing process to reduce swelling, inflammation, and redness.”

As support for the performance and establishment claims at issue, the marketer provided ERSP with testing on the product, evidence of its FDA 510(k) clearance, and information concerning the effectiveness of red and blue light therapy. Following its review of the evidence in the record, ERSP determined that the marketer supported its “Get Clear. Stay Clear” messages.

ERSP reviewed two short-form commercials in which money-back guarantee claims were made. In one version, the marketer clearly presented its 30-day, money-back guarantee while the other presented the guarantee as a 90-day guarantee appeared to be inconsistent with the specific terms of the 30-day, money-back offer provided on the website.

ERSP recommended that the marketer reconcile the use of the two different guarantees that are communicated in the broadcast advertising and include a disclosure that either provides the specific terms of the money-back offer or directs consumers to the illuMask website for the specific details. 

The company, in its marketer’s statement, said, “La Lumiere appreciates ERSP's review and confirmation of the illuMask claims.  ...  La Lumiere is committed to improving people's lives by way of light therapy and making this technology affordable and accessible to consumers everywhere.”

ERSP Recommends Nick Vertucci Real Estate Academy Modify Certain Claims for Real Estate Education Program; Company Agrees to Do So

The Electronic Retailing Self-Regulation Program (ERSP) has recommended that Nick Vertucci Real Estate Academy modify or discontinue certain claims for the Nick Vertucci Real Estate Academy education program.

ERSP is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus, Inc. The marketer’s advertising came to the attention of ERSP through an anonymous competitor challenge.

ERSP reviewed online advertising claims for the affiliate marketing, real estate investing program, including:

• “Over the last two years, his team has flipped over 800 properties across the country. They're coming to your city offering free training & information on how to make serious money in today's real estate market!”
• “specific strategies in flipping houses to make quick cash”
• “Interested in earning extra money in real estate? Want to learn how to make $30,000 in 30 days? Come to Nick's upcoming FREE real estate training workshop in a nearby city and learn how to get in, get out, and GET PAID!”
• “…make $10,000 to $40,000 per deal in your spare time without using any of your own money.”
• “James & Minke: 3 Properties Purchased; $33,112 Net Cash Flow 22% in Appreciation”

ERSP reviewed advertising claims made in radio advertising and at two of advertiser’s websites that promoted Nick Vertucci as a real estate investment expert who could teach customers how to make money with real estate investing through courses and training.

ERSP noted the marketer’s willingness to cooperate and participate in the self-regulatory process.

However, ERSP was concerned with representations regarding the implication that customers of the Nick Vertucci Real Estate Academy would have access to “up to $1,000,000” in “pre-approved funding.” ERSP recommended that the marketer modify the claim to disclose whether material terms and conditions that would affect the ability to obtain such funding.

Further, ERSP recommended the marketer discontinue performance claims that customers could earn money quickly and easily. While ERSP recognizes that it is possible to earn money in real estate investing, like any other wealth creation enterprise, success is typically the result of hard work and a time commitment. As such, advertisers should be careful not to communicate, through express or implied claims, that earning money using a product or service is effortless, easy and/or simple

ERSP acknowledged the marketer’s pledge to modify all earnings claims, but noted that the marketer should, in future advertising, refrain from making earnings claims until it reliable data that will support references to the amount of money that consumers may typically earn using the product.

ERSP noted that the marketer did not provide any evidence regarding the amount of money that students of Nick Vertucci have earned. ERSP does not dispute that the success stories depicted in the advertising are from real people with actual success stories. However, ERSP recommended that such testimonials be accompanied by clear and conspicuous language qualifying the claims with disclosures of typicality.

Finally, ERSP acknowledged the marketer’s pledge to add clear and conspicuous disclosures that can be read along with each testimonial, in order to alleviate the potential confusion about the typical results that consumers can generally expect to achieve.

The company, in its marketer’s statement, said that it “agrees with ERSP's recommendations, pledges to implement those recommendations and will implement procedures to ensure compliance with all federal, state and local laws, regulations, industry guidelines and best industry practices.”

ERSP Recommends Armando Montelongo Seminars Modify Certain Claims for Real Estate Education Program; Company Agrees to Do So

The Electronic Retailing Self-Regulation Program (ERSP) has recommended that Armando Montelongo Seminars modify or discontinue certain claims for the Armando Montelongo Real Estate Education program.

ERSP is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus, Inc. The marketer’s advertising came to the attention of ERSP through an anonymous competitor challenge.

ERSP reviewed online advertising claims for the real estate investing program, including:

• “Learn how you can start making money 'Flipping Houses' right here in your own back yard.”
• “See why people, just like you, are making money and having success using Armando's investing strategies, techniques, and systems.”
• “Learn from the #1 Education Company in the World”
• “Be one of the first 50 people to register and attend Armando's Mega Millionaire Event to receive a chance to win a $5,000 check* from Armando himself! Also receive your own VIP CASH FLOW PACKAGE and SOCIAL MIXER with Armando's team of real estate experts, a $500 Value absolutely FREE, just for attending!” and “When you attend your name will be entered into a drawing for a $5,000 dollar check. There are no strings and no catches. This drawing is something we are doing as a monthly customer appreciation celebration.”
• “The education I received through Armando’s system was more valuable than my college education.  I made over $45,000 in profit on my first flip.” [Amir H]
• “I successfully flipped my first property, with no prior real estate experience after learning Armando’s system and I made a profit over $34,000 on my first flip.” [Janie G]

ERSP also reviewed claims made during free live seminar events, including:

• “[Armando will] guarantee in writing you will make money by using Armando’s program.”
• Claims that Armando flipped 138 houses in his first 3 years in the real estate industry

The marketer’s websites (www.armandolive.com and www.armandomontelongo.com) and program infomercials explain that Armando Montelongo is a house flipper, entrepreneur, and motivational speaker.

As a preliminary matter, ERSP noted that the marketer revised a number of claims for AM Real Estate Education during the course of the inquiry.

The key issue before ERSP was whether the advertising at issue conveyed specific express or implied earnings expectations to consumers, aside from the general message that they could earn money using the techniques outlines by the program. ERSP noted its concern about the lack of any clear and conspicuous disclosures concerning the typical results consumers can generally expect to achieve from using the product.

Regarding earnings claims communicated by consumer testimonials used in the advertising, ERSP recommended that the marketer clearly and conspicuously, and in close proximity to the claims, provide consumers with some indication of the range or the average amount of money that can be generally earned based upon the scenario described in the testimonial.

ERSP noted in its decision that the marketer denied that the following information was communicated during a live seminar:

• “[Armando will] guarantee in writing you will make money by using Armando’s program.”
• Claims that Armando flipped 138 houses in his first 3 years in the real estate industry.

ERSP noted that representations communicated by a speaker during a live seminar are often unscripted and difficult to document. Further, without evaluating claims in the context in which they are presented, it is difficult to properly assess the messages communicated to consumers.

Nevertheless, ERSP emphasized that any claims that detail Armando Montelongo’s success in using the same techniques he is selling to consumers could be understood to mean that consumers can typically expect the same results. If the results are not typical, ERSP noted, the burden is on the advertiser to disclose what result could typically be expected. 
The company, in its marketer’s statement, said that it “has already incorporated many of ERSP’s suggested practices and has committed to evaluate its marketing practices in light of the ERSP review going forward.”