Legal Compliance

Operation “Income Illusion” comes to a close

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Back to business as usual? I’ve got an industry update for you today:

Back in December of 2020, I wrote an email about operation “Income Illusion.”

That clever name was what the FTC called its sting operation against a few direct response businesses, most notably Raging Bull, a big and successful financial publisher at the time.

The thing is, when the FTC hunts down direct response businesses, they often do so in really flagrant cases of fraud.

​​But the case against Raging Bull was… worrying. Because it was more basic.

​​This is what the FTC said Raging Bull had done wrong:

“The defendants claimed in their pitches that consumers don’t need a lot of time, money, or experience, and that the global coronavirus pandemic represents a great time to pay hundreds or thousands of dollars to learn their secret trading techniques, claiming in one ad that the pandemic ‘…might be the most exciting opportunity in decades!’ The defendants also made claims like ‘Learn how you could DOUBLE or TRIPLE your account in One Week!'”

In other words, the FTC took issue with Raging Bull over pretty standard direct marketing practices. Making big claims… using the most flattering testimonials… appealing to people’s greed and sloth.

Well, operation Income Illusion has concluded, at least in the case of Raging Bull. The verdict is in:

1. Raging Bull will have to pay $2.425 million to the FTC.

2. Raging Bull can’t keep making claims about potential earnings without having written evidence that those claims are typical for consumers.

3. Raging Bull can’t keep claiming that investors will be successful regardless of their experience, the amount of capital they have to invest, or the amount of time they spend trading.

Now I don’t know how much money Raging Bull was making back in 2020. But from what little I do know about financial publishing, $2.425 million is what a successful financial promo can pull in a week.

Also, I’m not a lawyer. But again, from what little I know about FTC regulations about marketing, points 2 and 3 above were already law, and are nothing new.

So to me, this entire verdict sounds like an ineffective elementary school teacher pointing to the sign on the wall and handing out detention to the bad kid in the back of the class. “How many times do I have to tell you Billy! No chewing gum! You’re driving me crazy!”

So what will be the consequences of this?

I’m terrible at predicting the future. But personally, I feel like it’s just back to business as usual, if that ever stopped.

After all, a few Agora imprints had a similar verdict made against them almost exactly a year ago. And yet, it hardly stopped them, or anybody else in the industry, from claiming that their next promo “… might be the most exciting opportunity in decades!”

So that’s all I got for you today.

Tune in tomorrow, where I’ll tell you about a little-known statistical anomaly… that’s allowing a small group of American patriots (as well as patriots of a few other nationalities)… to DOUBLE or TRIPLE the odds that their business will be a long-running success.

Verdict in for Agora

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The verdict is in. The background is this:

In October 2019, before any of us had heard of such an animal as a pangolin, the FTC went after direct response behemoth Agora. Specifically, the FTC said Agora deceived customers with two products.

The first of these was “The Doctor’s Guide to Reversing Diabetes in 28 Days.” No diet changes… no drugs… no exercise required.

How?

The pitch was that diabetes is caused by “Non-Ionizing Radiation,” which the FTC says is based on no known scientific fact.

The second deceptive product was a book titled, “Congress’ Secret $1.17 Trillion Giveaway.”

The advertising for this book claimed you are entitled to get “Republican checks.” And if you don’t collect yours, somebody else will.

Really?

According to the FTC, it turned out to be the old play of “transubstantiating” dividend-paying stocks into free money.

So two days ago, the United States District Court for the District of Maryland, Northern Division, announced the verdict for this anti-Agora action.

​​From what I understand:

Agora has to stop making misleading, unsubstantiated claims, as with the two products above. (For example, they have to drop the “Non-Ionizing Radiation” shtick I mentioned upstairs.) They also have to pay a fine of $2M.

I’m just reporting this as industry news. I don’t have a single specific point to draw out of this. But here are a few thoughts circling in my head:

1. The $2M fine seems easy to manage for a billion-dollar company.

2. I’m no lawyer or blind supporter of the Bill of Rights. But to me, banning books (and consequent advertising) that promote unproven medical theories sure sounds like a violation of the 1st Amendment.

3. Overall, this decision seems fairly limited and uninteresting. At least it’s nothing comparable to the Raging Bull action currently in progress, which I wrote about before Christmas.

But fear not. When that verdict comes out, I’ll send you another update… and you can then decide whether it’s time to look for a new job.

A chilling Christmas card from the FTC

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Maybe you’ve already heard about Operation Income Illusion. It’s the FTC’s latest action, and it started earlier this month — just in time for Christmas.

The FTC filed lawsuits against five different companies. Among these is Raging Bull, a big and successful player in the financial publishing space.

​​Raging Bull got a restraining order prohibiting it from doing any more marketing… and it had its assets frozen.

So what exactly did Raging Bull to draw the eye of the FTC? From the FTC site:

“The defendants claimed in their pitches that consumers don’t need a lot of time, money, or experience, and that the global coronavirus pandemic represents a great time to pay hundreds or thousands of dollars to learn their secret trading techniques, claiming in one ad that the pandemic ‘…might be the most exciting opportunity in decades!’ The defendants also made claims like ‘Learn how you could DOUBLE or TRIPLE your account in One Week!'”

Errr…

That sounds a lot like the VSL I just finished writing for a real estate investing opportunity. So I find this whole Income Illusion thing a bit chilling.

Because from what I’ve seen in the past, when the FTC goes after a direct marketing company, that company is probably doing something really shady.

But the FTC took issue with Raging Bull over pretty standard direct marketing practices. Making big claims… using the most flattering testimonials… appealing to people’s greed and sloth.

I have no idea where this will go in the future. Maybe the lawsuit will be dismissed… maybe it won’t, but Raging Bull will somehow beat it… maybe it will be a one-time action by the FTC to set an example, without broader consequences. Or maybe it’s a sign of things to come.

In any case, it’s something to keep an eye on.

Now here’s an unrelated pitch, also in time for Christmas:

I’m launching a weekly email newsletter about travel during corona (“…the most exciting opportunity in decades!'”). The first issue will go out tomorrow, right on Christmas Day. If you’re interested, you can sign up at the link below:

https://masksonaplane.com/

Avoiding the Facebook ban hammer through Personal Power

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This summer, one of my clients ran into some trouble with a Facebook ads campaign.

The product they were advertising was a plastic ball, filled with ceramic beads, which you’re supposed to throw into the washing machine and use instead of detergent.

I was in charge of writing the advertorial, so I wrote a first-person confessional with the headline:

“How I wash blood stains out of my clothes WITHOUT laundry detergent”

Facebook didn’t have a problem with my blood-stained headline. They also didn’t have a problem with the questionable product (I still don’t understand how or if it works). But they did have an issue with little things like:

* The use of words like “magic,” “crazy,” and “trick”

* Specific claims such as “it saves me hundreds on laundry detergent”

* Before-and-after pictures of clothes washed with this breakthrough technology…​​

In short, Facebook didn’t like anything that gave this ad the unpleasant but familiar odor of an old-school infomercial.

But wait a minute.

Maybe that comparison is not really fair.

Because right now, I’m hand-copying a very old and very successful infomercial.

It’s for Tony Robbins’s Personal Power tapes.

This infomercial looks like a segment from 60 Minutes. It opens with Tony and Fran Tarkenton, a Hall of Fame NFL quarterback, boarding a helicopter, and then flying around Southern California.

Once they land, Tony and Fran go inside a fancy house, smile and nod at each other, and chat about the good results people are getting from Personal Power.

The rest of the infomercial is punctuated by lots of testimonials, most of which are saying, “This system works really well, and it’s helped me.”

When you get the chance to buy the tapes, there’s no massive price anchoring, and there’s no “But wait, there’s more!”

If all this is starting to bore you, that’s kind of the point.

Because this infomercial was pretty classy, really not sensationalistic, and would have fit in perfectly into a Facebook advertising campaign today.

(And like I said, this infomercial was immensely effective. It helped launch Guthy-Renker Corporation, which at that time was just an experiment between a couple of guys, and now has revenues of over $2 billion a year.)

The point of all this?

Maybe these Facebook compliance requirements don’t have to hamstring sales…

Maybe direct response copywriters have just gotten into too much of a Gary Halbert and John Carlton groove…

And maybe there are plenty of other effective ways to sell stuff without !!! and crazy/amazing/jaw-dropping before-and-after.

Or maybe not.

But if you get the Facebook ban hammer, it’s something to keep in mind, and maybe something to comfort yourself with.

Anyways, if you need help with writing Facebook-compliant advertorials that still make sales, you might get some ideas here:

https://bejakovic.com/advertorials/