TV Advertiser Signs Fair Trading Legal Agreement
New South Wales Department of Fair Trading
News Release, October 10, 2000
A US-born TV advertiser promoting dubious memory and weight-loss programs has withdrawn "infomercials" for these products as part of a legal agreement with Fair Trading. Fair Trading Minister John Watkins said future advertising by Kevin Trudeau and his business, Shop America (Australasia), would be closely monitored for the next four years as part of the agreement.
The legal restrictions apply to advertisements for the Mega Memory System, which claim users can gain a photographic memory and children with Attention Deficit Disorder can benefit. They also apply to a weight-loss program, Atkins Answer, which allegedly turns the body into "a 24-hour fat-burning machine", can eliminate the urge to overeat in 60 seconds and was used by US Vice President Al Gore. None of these claims could be proved.
"Fair Trading demands that all NSW product advertising is accurate and fair," Mr Watkins said. "Shop America (Australasia) did not meet these standards and its advertisements have been withdrawn," he said. Mr Watkins said Fair Trading also would speak to television industry groups to urge them to make a clearer distinction between advertising and editorial content in chat and shopping shows.
Kevin Trudeau, who trades under the name Shop America (Australasia) Ltd c/- Rivkin Group, Double Bay, has US criminal convictions for dishonesty. He also had to repay nearly $US700,000 to US consumers after he was involved in pyramid-selling and a discredited anti-addiction self-help program.
Earlier this year, Fair Trading used a new NSW law, passed in May, to require Shop America (Australasia) to prove that claims made in its advertisements were true. The response from Shop America (Australasia) to Fair Trading did not substantiate these claims. Fair Trading subsequently asked the trader to enter an "enforceable undertaking" under section 73A of the Fair Trading Act, which without making admissions as to legal liability, require Shop America (Australasia) to:
- Not promote any product until claims made in advertising can be substantiated to Fair Trading.
- In any infomercial programs, disclose that the program is a paid advertisement. A second disclosure must be made immediately before any contact number to order products is displayed.
- Contact every NSW consumer who has purchased Mega Memory or Atkins Answer to advise them of its unconditional money-back guarantee.
- Hold an annual independent audit of Shop America (Australasia)'s fair trading compliance until 2004.
Shop America (Australasia) relies heavily on infomercials to promote its products. It does this through talk-show style interviews featuring Mr Trudeau that appear to be normal TV programming but are paid advertisements. Mr Trudeau also has done infomercials for Rene Rivkin's stockmarket bulletin, the Rivkin Report.
In 1998, the US Federal Trade Commission said claims made by Mr Trudeau in the US about the Mega Memory system were false and misleading and it criticised infomercials broadcast by Trudeau as a "deceptive format".
"NSW Fair Trading will not permit Mr Trudeau to transplant promotional methods discredited in the US to NSW," Mr Watkins said. "The closest watch will be kept to ensure that Kevin Trudeau and Shop America (Australasia) comply with NSW fair trading laws," he said.
This article was revised on July 21, 2006.