FTC to require real testimonials for advertisements

Rob Williams

Editor-in-Chief
Staff member
Moderator
Haha! It looks like the FTC is stepping into how advertisers push their product in a rather significant way. I'll just let the article speak for itself:

The Consumerist said:
Subway spokesman and occasional thin guy Jared Fogle may soon be out of work thanks to a new FTC rule banning commercial testimonials that warn "results not typical" or "individual results may vary." Under the new rule, marketers using, say, body builders to advertise weight loss pills are also going to have to show an average lardass whose results might be more typical. You can guess how advertisers are reacting to the change...

Ahh, I hope this goes according to plan. To also quote the first commenter:

Dj Butcher said:
Imagine a world where people were actually required to tell the truth...

Agreed. Especially when it's your money at stake.

http://consumerist.com/5179090/ftc-to-require-advertisers-using-testimonials-to-show-typical-results
 

madstork91

The One, The Only...
I kind of disagree...

While people like jered are a marketing tool/dream depending on which side of that you are on, he has also helped to inspire possibly millions to eat healthier, and walk more.

Subway was simply a tool for him, and as such was a great marketing opportunity.

There are other example of people like him... Who used a program, system, or pill to achieve something, and now are simply trying to help others make it here too, while collecting a check.

To require advertisers to show fat people who did not stick to the course of P90X, or were not following hydroxy cuts program, or who cheated every day on weight watchers, is kind of... well... Fucking retarded.

It not only takes away from the company trying to get their things out there, but also reduces that chance for people gaining hope from things to begin with...
 

Kougar

Techgage Staff
Staff member
While people like jered are a marketing tool/dream depending on which side of that you are on, he has also helped to inspire possibly millions to eat healthier, and walk more.

Yes, he has. But that inspiration is based on a false premise he used Subway to do so. Subway has gone so far as to claim all he did was eat their regularly and he magically lost his weight. The question boils down to whether or not falsely misleading people, even for their benefit, is right.

To require advertisers to show fat people who did not stick to the course of P90X, or were not following hydroxy cuts program, or who cheated every day on weight watchers, is kind of... well... Fucking retarded.

You misunderstand, if the person didn't stick to the regimen/directions/program, then they wouldn't have to be shown. This rule is for those commercials that show people that DID stick to the program, not just the few people that stuck to the program and magically lost weight, etc.
 

Kougar

Techgage Staff
Staff member
But will that be made clear in the new regulations?

Assuming the regulations ever live long enough to go into effect, I'm sure the media types would have their suits interpreting the language with a fine-toothed comb.

To me this just seems to state advertisers must also include typical results in their commercials... not just pick and choose the top 5-10% (which would be atypical) and tout them as the expected results.
 

Rob Williams

Editor-in-Chief
Staff member
Moderator
Stork, they aren't going to flaunt people who haven't stuck to a certain program, that'd just be ridiculous, and in effect, that would be false advertising. It's true... there are a lot of people out there with a total lack of ambition who can't stick to a certain weight-loss programme or what-have-you... I am doubtful the FTC cares to involve them in advertising. This will be all about the typical results, which are undoubtedly much less impressive than what the commercials currently show.

As Kougar said, Subway makes it look like Jared lost all the weight because all he ate were Subway sandwiches. If he did lose all the weight that way, it was probably because after the first week, he couldn't stop throwing up because of his massive intake of Subway sandwiches. Too much of one thing doesn't do a body good... you are going to get sick and tired of them eventually.

Given people inspiration is great, but giving them it with stretched-truths doesn't make much sense to me.
 

madstork91

The One, The Only...
I am sorry if with the current state of things, I am slightly biased towards the U.S. governments ability to regulate things...

They forced banks to give sub prime loans...
Senators directly benefited from that...
AIG got away with some shit... anf the gov not only new about it, but more congressional ppl got paid for it...
Now the economy trashed because of the financial sector going under from sub prime loans, AIG is being threatened with having pure gov control... And 4 of the key figures in regulating it were involved in its direct downfall to begin with...

Yeah, government involvement in a business has really worked out well.

Yup...
 

Kougar

Techgage Staff
Staff member
I am sorry if with the current state of things, I am slightly biased towards the U.S. governments ability to regulate things...

They forced banks to give sub prime loans...
Senators directly benefited from that...
AIG got away with some shit... anf the gov not only new about it, but more congressional ppl got paid for it...
Now the economy trashed because of the financial sector going under from sub prime loans, AIG is being threatened with having pure gov control... And 4 of the key figures in regulating it were involved in its direct downfall to begin with...

Yeah, government involvement in a business has really worked out well.

Yup...

I'm not defending the government, and I agree some Congresspeople have directly benefited from the financial markets they encouraged through legislation (Or the lack thereof).

I used to agree with that line of thought, but now I've come to the conclusion its just an oversimplification to blame the government, they only helped nuture a perfect environment for it to occur. I rather liked this take on it, because it does cover all the angles that I recall from my classes: http://www.vimeo.com/3261363
 
I hope this push for the truth from the FTC goes a little further than the testimonial advertisements that anyone with a third grade education ignored already.

As far as blaming the government for the credit crisis... it's not an oversimplification, it's a logical assesment of blame. AIG didn't repeal the Glass-Steagal Act. Citigroup didn't pass the Commodities Futures Moderization Act of 2000. Washington allowed finacial industry lobbyists to dictate policy and gleefully passed bad legislation that stripped the SEC of what little oversight it had over financial derivatives markets.
 
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Kougar

Techgage Staff
Staff member
I hope this push for the truth from the FTC goes a little further than the testimonial advertisements that anyone with a third grade education ignored already.

Let me phrase it this way... if everyone with a third grade education did ignore those blatently misleading advertisements, then they would have stopped doing them. They only continue to make more because people are buying and they are making money from them.

As far as blaming the government for the credit crisis... it's not an oversimplification, it's a logical assesment of blame. AIG didn't repeal the Glass-Steagal Act. Citigroup didn't pass the Commodities Futures Moderization Act of 2000. Washington allowed finacial industry lobbyists to dictate policy and gleefully passed bad legislation that stripped the SEC of what little oversight it had over financial derivatives markets.

That's all completely true. But Washington didn't tell the financial giants to buy subprime mortgages, it was the financial company's own choice to do so. There are plenty of smaller local and regional banks that have made mortgage backed loans and have not suffered any operating losses from the market collapse, because they didn't get blinded by dollar signs in pursuit of the most lucrative subprime market.
 
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Let me phrase it this way... if everyone with a third grade education did ignore those blatently misleading advertisements, then they would have stopped doing them. They only continue to make more because people are buying and they are making money from them.

I'll put it this way then... the FTC can't regulate stupidity. It's nice that the FTC is making a show about cracking down on misleading ads, but these products are likely to continue to be purchased by exactly the same demographic of delusional/intellectually challenged consumers. You don't see ads for ground rhinocerous horns or dried tiger penis, but there are importers making a mint selling those very products to the ignorant.

That's all completely true. But Washington didn't tell the financial giants to buy subprime mortgages, it was the financial company's own choice to do so. There are plenty of smaller local and regional banks that have made mortgage backed loans and have not suffered any operating losses from the market collapse, because they didn't get blinded by dollar signs in pursuit of the most lucrative subprime market.

Small banks were not in a position to do the kind of damage to the economy that the larger institutions ended up doing, not because they were less "greedy", they simply didn't have the assets to create the complicated credit swaps between mortgages/credit cards/insurance and package their collateralized debt holdings into securities - that's something only a large financial instiution can do. In fact they were making bad loans and them selling them in volume to the larger banks out of sheer greed. The smaller banks that couldn't dump their bad debt on a larger bank are having trouble staying afloat as about 40 small regional banks have gone under in the last year.

The laws that I mentioned were written so that the larger financial firms could colaborate with each other to concoct complicated credit derivatives with as little oversight from the SEC as possible. That's why an insurance company like AIG was selling mortgage derivatives - without the repeal of Glass-Steagall and the further erosion of checks and balances in the Commodities Modernization Act the credit crisis never happens.

If we had a laissez-faire economy it would be easy to blame corporate greed and leave it at that; but we don't... ultimately it comes down to the government's failure to safeguard our economy by allowing the foxes, not only into the henhouse, but they let them redesign it too. It's no accident or coincidence that as soon as regulations that had been on the books since the depression of the 30's were repealled that the economy was alowed to spiral out of control.
 

Kougar

Techgage Staff
Staff member
Small banks were not in a position to do the kind of damage to the economy that the larger institutions ended up doing, not because they were less "greedy", they simply didn't have the assets to create the complicated credit swaps between mortgages/credit cards/insurance and package their collateralized debt holdings into securities - that's something only a large financial instiution can do. In fact they were making bad loans and them selling them in volume to the larger banks out of sheer greed. The smaller banks that couldn't dump their bad debt on a larger bank are having trouble staying afloat as about 40 small regional banks have gone under in the last year.

I wasn't addressing anything about damage potential. I was simply stating all financial banks had a choice when making those mortgages, and the larger ones had a choice in buying those bundled packages. They did so out of greed despite common sense, and have paid for it. In a way you are proving my point, those smaller banks that willingly chose to make bad mortgages are now suffering for it or failed and have been closed.

The laws that I mentioned were written so that the larger financial firms could colaborate with each other to concoct complicated credit derivatives with as little oversight from the SEC as possible. That's why an insurance company like AIG was selling mortgage derivatives - without the repeal of Glass-Steagall and the further erosion of checks and balances in the Commodities Modernization Act the credit crisis never happens.

From what I've read derrivatives were created in 1997 and were not impacted by the Glass-Steagall Act, and especially ignored by the Commodities Modernization Act. What was most interesting to me about the Commodities Modernization Act was the deliberate insertion of a loophole for energy corporations by Enron lobbyists, which subsequently lead to the Enron collapse.

If we had a laissez-faire economy it would be easy to blame corporate greed and leave it at that; but we don't... ultimately it comes down to the government's failure to safeguard our economy by allowing the foxes, not only into the henhouse, but they let them redesign it too. It's no accident or coincidence that as soon as regulations that had been on the books since the depression of the 30's were repealled that the economy was alowed to spiral out of control.

To use your argument, we can't legislate away greed just as we can't legislate away stupidity.

Yes, Greenspan failed miserably when stating in 2005 that the credit default swap industry didn't pose enough of a risk to require strict oversight or regulation. Considering it was something well over $145 trillion I don't see how Greenspan would believe such a thing. But even if he had regulated them, and The Glass-Steagall Act hadn't been repealed in various pieces, once the housing market bubble broke we would still be mired in this mess. Just like Madoff's ponzi scheme, everything broke down once the housing market quit going up. Homeowners were sticking with it expecting their already grossly price-inflated homes to only increase in value... the majority of the homes that were overpriced saw the biggest losses as they fell back down to sustainable levels.

Something regulation couldn't and can't fix is how the financial system works. In the world of finance cash bonuses are often just as or more important than the base salary... the idea being the more money they earn or revenue they generate then the larger their respective bonuses will be. Obviously this creates a conflict of interest where financial managers, execs, and others will be willing to take massive amounts of risk just so they can pull even larger bonuses, and is exactly what they did. Whatever Congress does do, there will always be new workarounds devised to cheat the system or turn a profit by greedy people.

The repealing of the Glass-Steagall Act (by the Gramm-Leach-Bliley Act) didn't suddenly cause it, it only helped in my view. Market conditions were already set up, housing prices had been climbing since the early 90's, and credit was plentiful. Throw in greed due to incentives to take risks for larger bonuses and the credit default swap cookie jar that every major financial institution had their hand in because they were lucrative options, and it was a powder keg. The US financial system has never, ever been anywhere close to as leveraged as it was during the last 10 years, and might not be again for some time.
 
I wasn't addressing anything about damage potential. I was simply stating all financial banks had a choice when making those mortgages, and the larger ones had a choice in buying those bundled packages. They did so out of greed despite common sense, and have paid for it. In a way you are proving my point, those smaller banks that willingly chose to make bad mortgages are now suffering for it or failed and have been closed.

You clearly implied that small regional banks that have survived the credit crisis were somehow less greedy than larger banks without a full understanding of the big picture. Pointing out that regional banks were originating and selling off bad loans to larger banks in no way contributed to your argument, it illustrated a point that you missed.

From what I've read derrivatives were created in 1997...

Um... what? Futures, options, forwards and swaps have been around for ages. Without derivitives Lloyd's of London would still be a coffee house.

...and were not impacted by the Glass-Steagall Act...

The types of derivitives involving combinations of mortgage debt, credit debt and insurance risk that became the most toxic were directly impacted by the provisions of Glass-Steagall that prohibited banks from offering securities and insurance products. The idea that Glass-Steagall had no impact on the derivitives market that sent the econmy into a tailspin is absurd.

...and especially ignored by the Commodities Modernization Act. What was most interesting to me about the Commodities Modernization Act was the deliberate insertion of a loophole for energy corporations by Enron lobbyists, which subsequently lead to the Enron collapse.

The derivites market was especially ignored by the CMA? That's right up there with "derivitives were created in 1997". Beyond giving Enron enough of a loophole to destroy itself, it also provided that banks could sell derivitives without regulation. It's a public document, reading it might've kept you from tripping on your own arrogance.

To use your argument, we can't legislate away greed just as we can't legislate away stupidity.

You'd be better suited refining your own arguments and catching up on your reading.

The Glass-Steagall Act and the Bank Holding Company Acts provided a pretty good hedge against the type of corporate greed that created the credit crisis. Nothing's perfect, but it worked for seventy years.
 

Rob Williams

Editor-in-Chief
Staff member
Moderator
I thought about this more, and I have to wonder about the products that are snake oil, but the users of said products themselves are convinced they work. What will happen there? These advertisers might STILL get away with misleading claims, simply because the users themselves are brainwashed or naive as hell.

Airborne and the Ionic bracelet come to mind.
 
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