The federal government is putting a squeeze on TV advertising. Turning the vise is Deborah Majoras, who took the post of Federal Trade Commission chairman in August.
The FTC, charged with protecting the American public from deceitful sales folk and greedy monopolies, has declared war on ads for bogus diet drugs.
Not one to mince words, Majoras says her mandate is simple: “We are relentlessly pursuing these cowards who prey on consumers.”
Next, the FTC is considering strikes against snack-food commercials during children’s programming, as well as paid product placements.
If Majoras squeezes, the TV business could see a drain on profits. The $3 billion spent yearly on TV food advertising to kids is critical to the survival of children’s programming on commercial stations, and product placements are considered by the industry as a way to counter the loss of ad dollars as more viewers use TiVos to zap through commercials.
So far, Majoras’ strategy is in lockstep with the Bush Administration’s determination to rely on industry self-policing to protect consumers in all areas of the economy. If honest businesses do more to ward off the crooks in the first place, Majoras’ agency will have fewer complaints to investigate. “We simply can’t do it all at the backend through enforcement,” she declared during a private luncheon last week with the editors of Good Housekeeping.
For the past year, the FTC has been urging broadcast stations, cable operators and other media to reject diet-drug ads that make bogus claims and to report the marketers to the FTC. When TV-station staff members spot ads that make claims too good to be true—Lose 15 pounds in two days!—they have been asked to reject the ad and tip off the FTC. The marketer’s data is then put into an FTC database dubbed “Consumer Sentinel”; the agency uses this to track down scammers. State and local governments can tap into the FTC database to hunt down fraudulent marketers as well.
Majoras says that, after a slow start, the program has cut fraudulent claims in diet ads by 70% since January 2004. When the program began, an FTC survey showed nearly 50% of diet ads in all media contained false claims about the products’ proven effectiveness or ability to cut weight without changes in diet or exercise. Today, only 15% of diet ads contain these illegal claims. A full report on the results, including a performance breakdown across broadcast, cable, print and online ads, is due later this month.
“We think the media should be proud,” Majoras said last week. “This is a great example of our power when we partner with industry.” She hopes to roll out similar consumer-protection partnerships with media companies regarding marketing to kids and TV product placements.
Shutting down diet-drug scams is more important today than ever before, because a record 70 million Americans are overweight. Besides ripping off consumers, weight-loss frauds lead individuals to delay the difficult task of cutting calories and working out, Majoras says. She acknowledges that many questionable diet products continue to be marketed on TV but, increasingly, the ads avoid claims that shedding weight will be as simple as taking a pill. “It’s still crappy product,” she says, “but at least they’re not saying you don’t have to bother with diet or exercise.”
Some in Congress think the FTC is putting too much faith in the willingness of businesses to go along with Majoras’ strategy. They want the commission to add restrictions on food marketing to children. The pressure is forcing the FTC and the Department of Health and Human Services to consider examining companies’ self-imposed limits on marketing food to kids.
Under a government contract, the Washington-based Institute of Medicine is drawing up recommendations for the FTC that will be unveiled in the spring.
Already, consumer advocates are taking Majoras to task for not pushing tougher rules. Says Mark Cooper, research director for the Consumer Foundation of America, “The notion that huge companies are going to limit their behavior voluntarily is ludicrous.”
Majoras says the FTC is unlikely to limit what companies can market to kids unless Congress orders it, but the agency is already consulting with food producers to help them honor their efforts to self-police. Because of rising obesity rates in children, “there is a massive debate” over children’s advertising in Washington. Additionally, trial lawyers are expected to file class-action suits against the companies.
The possibility that Congress will force Majoras’ hand is causing food companies to listen to the FTC’s advice now, she says: “Food companies see it coming.” She says Kraft, for instance, was smart to voluntarily eliminate ads for unhealthy foods such as Oreos and Macaroni & Cheese during programs aimed at young children.
Majoras is no stranger to the ways of Washington. Before accepting her current position, she was an associate at law firm Jones Day (she made partner in 2004), then was U.S. Deputy Assistant Attorney General for three years.
She expects plenty of critics and plans to blunt their attacks by promoting FTC initiatives in the press.
She learned the hard way that the press can be valuable when courting public opinion. As the Justice Department’s chief prosecutor in its antitrust case against Microsoft, Majoras avoided reporters’ calls after Microsoft rivals leaked drafts of a settlement she was negotiating with the company a week before the deal was to be announced. She regrets stonewalling the press, because the stories reflected a negative view—that the government was going too easy on Microsoft—without any counter-opinion from the government’s side.
“It was a bit of shock,” she says. “But I learned from those public-relations mistakes.”