Editor’s Note: The FTC Leans Hard on the DR Business … Again1 Oct, 2012 By: Thomas Haire Response
Consider the direct response industry on alert.
The recent spate of Federal Trade Commission (FTC) announcements against DR marketers is the government agency’s latest notice that the industry is in its crosshairs. And while, certainly, there is no dearth of questionable marketing practices taking place among the less savory in the business, all DR marketers seem to pay the price when the FTC comes calling.
In announcements about the marketers of the John Beck financial program, the Ab Circle Pro fitness product and the Your Baby Can Read line of educational products, the FTC levied some of its strongest fines and harshest criticisms of DR marketers in years. Some legal insiders in the business seem to believe this is just the beginning of a larger and more troubling campaign against marketers who skirt the line in direct response.
Certainly, it’s hard to make a defense of many of the claims that got these businesses in trouble. But the $478 million judgment against the marketers of John Beck (after they decided to fight the FTC), the $185 million requested in a filed complaint against Your Baby Can LLC, and an order of up to $25 million in damages against the marketers of Ab Circle Pro all seem to lack balance — not to mention how cynically the FTC has handled these (and many past) cases involving DR products.
No one is saying that the FTC shouldn’t tackle deceptive marketers or that those marketers shouldn’t have to pay stiff fines for the error of their ways. But this is the same FTC that has gone light on companies like Goldman Sachs and others responsible for nearly throwing the country into a depression four years ago. Now, it decides that DR marketers it finds guilty of deceptive advertising should be responsible for paying back every penny from Dollar One of their first sales forward?
Let’s set one thing straight: I am not anti-regulation. I fully believe in what the FTC is charged to do as a regulator. I just don’t believe in how it’s currently applying its powers in the DR space. The FTC always talks about protecting consumers. But what purpose does it serve to go after a bad marketer five years — instead of five weeks — after the product hits the air? At that point, what consumer is protected?
When marketers themselves are requesting more immediate government intervention, how upside-down is that? Yet, I’ve heard just that from many DR marketers: the FTC should jump in within the first month a deceptive ad is on the air. To these marketers (and other outside observers), it appears that the FTC is simply waiting for the deceptive marketers to max out their profits before stepping in an lining the government’s coffers with the spoils. That’s not the FTC’s directive; it certainly doesn’t benefit consumers; and it clearly has a chilling effect on how reputable marketers perceive the DR space.
— Thomas Haire, Editor-in-Chief