Expressing concerns about the earnings claims and testimonials found in advertising for a personal finance subscription service providing investment recommendations, the Electronic Retailing Self-Regulation Program (ERSP) advised the company to modify or discontinue its claims.
Tipped off by an anonymous competitor challenge, ERSP reviewed the advertising for Personal Finance disseminated by Investing Daily, a division of Capital Information Group, Inc. The entry-level subscription provides subscribers with a wide variety of investment recommendations, as well as access to materials from spokesperson Jim Fink. The challenged claims were found on the advertiser’s websites and an order form page.
The self-regulatory body reviewed four categories of claims: earnings claims (“Give me 9 minutes a week and I guarantee you $67,548 a year” and “Look how easy it is to collect thousands of dollars in ‘free money’ every month”), risk-free claims (“And that’s why selling options is about the closest you can get to never losing money investing” and “Try it now at no risk, just click the button below”), testimonial and customer success claims (“‘I was able to build my portfolio to $2M+…’ – Glenn C.”), and pricing (“These prices are the lowest we’ve ever offered for access to my options trading strategy” and “I’ve charged nearly $1,500 for access to this information in the past. But when you sign up for Personal Finance right now, it’s yours entirely free of charge”).
Beginning with the earnings claims, ERSP found that reasonable consumers could interpret the claims to mean they will earn money by subscribing to Personal Finance, and the self-regulatory body questioned the documentation provided by the advertiser to back up the claims.
For example, the advertiser submitted articles documenting the prior success of trades recommended by Jim Fink’s materials. However, the data came from a higher-priced program rather than from Personal Finance, ERSP noted, and the net profits touted in the article were based on different amounts and types of trades.
The self-regulatory program recommended that the advertiser discontinue any express or implied earnings claims, and refrain from making any claims that earning a profit using Personal Finance is quick and/or easy and can be accomplished in “9 minutes a week.”
“[C]laims of quick and easy profits, when accompanied by statements indicating that no experience is necessary to be successful (i.e., earn money), and/or that significant money can be earned without significant effort (e.g., ‘9 minutes a week’), only contribute to the message that earning money can be done without putting in the requisite time and effort,” according to the decision.
Turning to the consumer testimonials and endorsements (including those from spokesman Jim Fink), ERSP found the advertiser failed to submit information regarding what the “typical” customer experience with Personal Finance would be, and whether the featured testimonials were “atypical.” Lacking this reference point, the advertiser should stop using earnings claims in consumer testimonials, the decision said. The advertiser should also stop using testimonials from consumers who obtained their results from programs other than Personal Finance.
As for the risk-free and pricing claims, ERSP again suggested changes. The advertiser should remove any claims that expressly, or by implication, communicate that using the techniques detailed in the Personal Finance program come with little to no risk. ERSP also suggested that claims regarding “limited-time deals” be discontinued.
“ERSP was concerned that [the] pricing claims could add undue sales pressure to consumers by creating a sense of urgency that they purchase the product quickly to receive the limited price, when, in fact, the same offer is continuously made available by the marketer,” according to the decision, and ERSP encouraged Personal Finance to adhere to the Federal Trade Commission’s Guidelines Against Deceptive Pricing.
To read the press release about the decision, click here.
Why it matters: While ERSP acknowledged the advertiser’s full cooperation and good faith efforts, including voluntary modifications to its advertising, the self-regulatory body recommended that the earnings, risk-free, testimonials and pricing claims all be discontinued.