From the inside out

Would consumers be interested?
We now had our infomercial for Moisturol. But we knew we couldn’t air it on television and take money from viewers by selling them a product that didn’t work. But we wondered if our infomercial was effective. To find out, we went to a mall in Las Vegas, and set up a kiosk to screen our infomercial and show off our product.

John Larson, Dateline correspondent: Do you feel like it’d be something you’d be willing to buy?

Girl in mall: Oh yeah definitely. It’s a lot easier to take a pill rather than to smother your whole body in lotion.

Woman in mall: I’m always on the lookout for moisture, things that will make the skin look younger.

Some shoppers even told us how much they’d pay!

Woman in mall: I wouldn’t go over $59 a month.

Woman in mall: $39.99 at the most.

Woman in mall: No more than a hundred dollars.

Of course none of them knew Moisturol’s secret ingredient.

Larson: This particular product actually is...

Woman in mall: That’s a group of liars on that screen?

Larson: It's Nestle Quik is what’s in the pill!

Woman in mall: (Laughter) I’m going away now…

But when these women realized they were ready to spend good money on Moisturol because it had been endorsed by women who turned out to be actresses and by a medical doctor, the laughter stopped.

Woman in mall: I personally wanna take her license away! Because if she’s a doctor and she just certified that Nestle Quik will change your skin?

Woman in mall: It kind of appalls me that people are gonna support something that’s not truthful.

Would anyone stop an infomercial for an ineffective product?
The mall was as close as we’d get to test the sales potential of Moisturol. But had we wanted to put our infomercial on television, would anyone have stopped us? We took that question to our parent company, NBC Universal.

Allan Wurtzel, NBC President of Research and Media Development: If Moisturol did not have the substantiation that we require with respect to its efficacy, with respect to its safety, then it never would have aired at NBC.

Alan Wurtzel is NBC’s President of Research and Media Development. He oversees NBC’s effort to make sure questionable ads do not air on the NBC Television Network.  Wurtzel admits the network has no say over what infomercials air on most of its 226 NBC affiliate stations, but says his department is sometimes consulted when questions arise at the 10 stations NBC owns and NBC’s 12 cable channels.

John Larson, Dateline correspondent: What do you think about an NBC cable outlet?

Wurtzel: It wouldn’t have aired on an NBC cable outlet unless there was a mistake that was made. In other words, there is no intention to do it.

LINKS FROM THE FEDERAL TRADE COMMISSION Consumer information publications (.PDF) Miracle Health Claims Weighing the Evidence in Diet Ads Pump Fiction Avoiding the Muscle Hustle

After the interview, we checked with the Infomercial Monitoring Service. It found that NBC cable properties—including CNBC, Bravo, Sci-Fi and USA have taken in nearly $11 million dollars running just four questionable infomercials since 2004. Those include one ad whose makers paid a $20 million dollar settlement to the FTC, the largest ever settlement of an infomercial case.

So if Moisturol had aired somewhere, what would the Federal Trade Commission, the government agency charged with protecting you from deceptive infomercials, have done about it?

Mary Engle, Federal Trade Commission: I think there’s a good likelihood that we would have seen you in court.

The FTC’s Mary Engle believes Moisturol would have been flagged.

Engle: A pill that helps you take away wrinkles and smoothes your skin sounds suspicious to me. so there’s a good likelihood that we would have gone after you.

Larson: Do you ever stop infomercials before they get to the air?

Engle: No, the First Amendment to the constitution guarantees free speech in this country. And that means that until a deceptive claim is made the government can’t stop it beforehand.

Now the FTC is getting help from the infomercial industry.

Meet Barbara Tulipane, President of the  Electronic Retailing Association, which represents 350 companies, many involved in making or distributing infomercials. Here’s what she said when we told her about Moisturol.

Barbara Tulipane, president of Electronic Retailing Association: There are shows that I look at and think "My god, how did they get that on the air?" I’m appalled. You have to have substantiation. If you make a claim, you’d better have the study to back it up or you will be sought after.

Sought after by the infomercial industry’s self-regulation program, established in 2004. Its aim? To identify marketers behind questionable infomercials, and then attempt to get the ads either changed or off-the-air.

And there are signs it’s beginning to work: Remember the ad whose makers paid an FTC record settlement of $20 million? ERA’s self-regulation program brought the ad to the government’s attention.

A money-maker?
No one knows whether Moisturol would have been targeted or fined. But infomercial industry pioneer Greg Renker says even if the government eventually caught up with us, Moisturol would have made a bundle.

Greg Renker, infomercial industry pioneer: I think a product like that on the air might have made $10 million dollars in net profit in the first year alone, before the FTC or other government agencies were even stepping up to go after you.

Larson: And if they did go after us, how much would they have fined us?

Renker: They’d be lucky to get two million out of you. They’d tell you you can’t do ingestible skin care anymore. So next year you’re going to do weight loss!

Larson: With $8 million dollars in my pocket?

Renker: With $8 million dollars in your pocket, you’re going to double your money on another false and misleading claim.

The infomercial maker set conditions for an on-camera interview that we found unacceptable. But in letters, the infomercial company’s attorneys allege that NBC used deception to “manufacture news.”

The company’s attorneys write, “Like the shameless scripted ‘reality’ television programs broadcast today, Dateline NBC hatched a deceitful plan and then day after day after day after day told lies and made false statements and representations to perpetuate it.”

The attorneys say the marketer was merely a production company, making an infomercial for a product that Dateline created, relying on information that Dateline provided. Specifically they point to our statement that individual ingredients in the product had been approved by the FDA. They also point to information we provided claiming each of those ingredients has been known to improve the skin—the information we gathered from a simple Google search.

Finally, they say that under the contract we signed it was Johnston Products, not their client, that was responsible for substantiating all the claims in the infomercial—and making sure it did not violate any laws or FTC regulations.

But remember, the company wrote the Moisturol script, and hired the doctor and all the women who appeared in the infomercial. And the FTC told us that an infomercial maker can be held liable for deceptive claims if it played an active role in developing the claims and “if the company knew or should have known that the claims had no reasonable basis.”

Our investigation was complete. We’d learned that of the 700 hundred new infomercials hitting the air each year, a percentage make deceptive claims— a percentage critics suggest could cost Americans billions of dollars a year.

We figured it was time to take what we had learned—about how a successful infomercial company creates credibility where there is none, how it hires actresses who admit they lie in infomercials, how a medical doctor endorses a product without ever checking it out— and take all this to the nation’s Capitol.

U.S. Senator Mark Pryor, Senate Subcommittee for Consumer Affairs: We need to step in and stop this.

U.S. Senator Mark Pryor of Arkansas is the ranking Democrat on the Senate Subcommittee for Consumer Affairs. We showed him portions of our investigation.

Larson: I think most Americans, they think, "If it’s on TV there must be somebody making sure that this is okay. It’s met some standard."

Pryor: People think there’s no way that these people are just actors, there’s no way that they’re lying to me, or someone, the government would step in and wouldn’t allow this to happen. But what Dateline NBC has found is that it is in fact happening. We need to have the FTC send a very clear signal to the industry that these type infomercials will not be tolerated.

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