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Is it a News Story or an Advertisement?

May 15, 2023March 16, 2020 by Edgar (aka MrConsumer)

More and more online news sites seem to be blurring the line between bona fide news and stories that seem more like advertisements.

Last fall, we demonstrated how some Tribune newspapers published product reviews naming the “best” products in a particular but sometimes obscure category, while the publisher quietly earned a commission on the sale of each one shown. Making money may have been a big motivation behind the columns.

Now Business Insider, a popular online site featuring business news stories, is publishing some articles that seem more like promotions than news features.

For example, last week they published this story:

Starting in the second paragraph, the reporter touts Ally Bank and the 11 high-yield savings accounts that she has opened there:

I earn interest on the money that’s sitting in that account, and it feels like I won a prize every time I check it.

My husband and I have 11 high-yield savings accounts with Ally, and we wouldn’t have it any other way.
…
Ally’s online interface makes it easy to see how much I have saved for each goal, and how much I’ve earned in interest this year — currently $44.31.

Say what? You have 11 accounts at Ally and all you’ve made is a measily $44? (We wrote to the reporter to ask if all that was really true, but she did not respond.)

In the story, not a negative word is said about Ally. The reporter mainly extols the virtues of high-yield savings accounts and the one at Ally Bank, but ignores the fact that more than three dozen other banks tracked by DepositAccounts.com pay higher rates of interest on savings accounts than Ally does.

Toward the end of the story, there is an embedded advertisement. Can you guess what bank is being advertised there?

*MOUSE PRINT:

That fine print says that a company called SmartAsset has placed this ad and earns revenue from it, as one might expect.

Business Insider then posts a disclaimer but only after the end of the story:

*MOUSE PRINT:

So Business Insider gets a cut of the commissions when readers open an Ally Bank account. Or perhaps 11 of them.

What is surprising is that back in October, Business Insider published two other similar pieces about Ally Bank where different reporters each touted their experiences with the same bank (and did not include criticism, nor any comparisons to other banks with high-yield accounts):

“I opened a high-yield savings account with online bank Ally to earn 20 times more on my money, and it’s safe to say I’m obsessed”

and

“I ditched my bank when I got married to earn 200 times more with an Ally high-yield savings account, and now I’d tell anyone to try it”

Exactly how many first person testimonial articles touting Ally Bank is Business Insider planning to publish? Could all these stories really be more about making money for Business Insider, Smart Asset, and Ally Bank rather than serving readers with a useful, objective analysis of high-yield savings accounts and the pros and cons of various providers?

Apparently a marketing theory gaining traction suggests that publishers can increase their their income by filling webpages with more “commerce content” — product-centric stories rather than traditional news stories or sponsored stories or ads. When viewers read these positive stories and if tracking reveals they bought the product or service, the publisher is compensated. According to one company in this business, Skimlinks, the most advanced publishers can derive 25-percent of their revenue this way.

The problem for readers is poor disclosure. Publishers should be upfront and disclose financial ties right at the top of stories, so we can better distinguish articles designed to sell us stuff from conventional editorial content.

The Federal Trade Commission (FTC) has two sets of guidelines that call for clear and conspicuous disclosure — one when commercial content is made to look like conventional editorial content (Native Advertising Guidelines) and the other when there is a financial connection between a presenter of information and the subject of that information (Endorsement and Testimonial Guidelines).

We asked all the parties involved (Business Insider, Ally Bank, and Smart Asset) to explain what’s going on here. Are these bona fide news stories or advertisements? Who provided the story and who is paying whom? And do any of them think that readers are being put on clear notice of the underlying commercial nature of them?

Business Insider did not respond directly, but through SmartAsset provided this statement:

Business Insider’s personal finance reporters covered Ally as a product they would recommend, which is their standard practice. In lieu of affiliate links which are common when it comes to “commerce content,” SmartAsset was used to sell ads against these stories. Any ad revenue generated by such coverage occurred independently of and only after the reporters’ decision to write about Ally.

For its part, SmartAsset (the company which placed the Ally ad), said it did not write the stories, nor pay Business Insider to write them. It only shares revenue with them.

Lastly, Ally Bank said it was not aware of the three stories above before they were published. It says it neither paid Business Insider nor SmartAsset to run them. It does pay SmartAsset to list its deposit rates on various websites.

So, what’s a savvy reader to do? Look more closely at content (stories, blog posts, etc.) even on respected news websites. Ask yourself why is this being posted? Is it truly conveying objective information, including both pros and cons? Are other competing products or services compared? Is there an ad or link within the content directly related to the subject of the story? Are there any disclosures that might reveal a hidden financial connection?

For our part, we will be bringing the concepts and issues related to “commerce content” to the attention of the FTC as they explore what changes should be made to their testimonial guidelines. You can participate in their process here.

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Caution: You Could Get Overcharged on Some Advertised Sale Items at Staples .com

January 27, 2020January 27, 2020 by Edgar (aka MrConsumer)

If you’re not careful, you may wind up paying the regular price for an item rather than the sale price when shopping on the Staples.com website.

Here is a chair that was advertised last week in both their physical circular as well as the online version.

When clicking this item in the online circular, a box comes up with the $149 price showing, and a button to add it to one’s cart.

If you click that button, the item is confirmed to be added to the cart at the sale price. But then something unsettling happens on the next screen.

*MOUSE PRINT:

In the cart, the chair jumps back up to the full regular price — $100 higher than advertised. If you were only buying a single item, the overcharge would be easy to spot. But if you were buying many things and had no idea what the order should total, you could easily overpay.

We asked the PR folks at Staples what’s going on here — why aren’t customers always being given the advertised sale price when shopping on the Staples.com website particularly if using their clickable online circular? Despite multiple requests, the company did not respond, but lo and behold soon after receiving our initial email, that chair magically became an “in-store only” item at the advertised price.

If the company is relying on the blurry, microscopic online general disclaimer below [that we highlighted] saying that prices can vary on the phone and online, they better check state rules that require exceptions to prices and availability to be disclosed specifically as well as clearly and conspicuously, among other requirements.

*MOUSE PRINT:

Unfortunately for customers, the chair example above is not an isolated case. In all, while the price of most test items we tried did not change, we found half a dozen sale items from last week’s online circular with substantial discounts (shown under the green “ad price” below) that all jumped up to regular price when added to our cart. And none of these was specifically listed as in-store only prices or items.

*MOUSE PRINT:

We don’t know why this is happening. While we don’t think Staples has a grand plot to misrepresent sale prices, this does not appear to be just a one-time problem. This week (the week of January 26) it took no more than two minutes to find an advertised sale item in Staples’ print and online circular that jumped up in price when added to the cart for in-store pickup. This time, however, the price in the cart was even higher than their regular price, triggering what appeared to be a $13 overcharge.

*MOUSE PRINT:

We are turning over our findings to the Consumer Protection Division of the Massachusetts Attorney General’s Office with the hope that they will open an investigation into these advertising practices. We have no illusions, however, that the AG will do anything about it despite the fact that Staples is headquartered in Massachusetts and many people could experience overcharges. Nine months ago, we alerted them to widespread misleading savings claims being made by Wayfair.com, another Massachusetts-based company, but they seemingly have done nothing. These everyday pocketbook issues are important, affect thousands of consumers, and represent alleged violations of the AG’s own regulations.

In the meantime, shoppers have to protect themselves. Be sure to double-check the price you are actually going to be charged when you add any sale items to your cart at Staples.com.

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Advertising Masquerades as Program Content on TV Talk Shows – Part 3

December 9, 2019December 9, 2019 by Edgar (aka MrConsumer)

For the past two years, Consumer World has been investigating TV talk shows that present what looks like a typical informational segment, but in fact the program is quietly making money by airing it. In essence you are watching an infomercial — advertising masquerading as regular program content. (See our first two stories, one about the truth behind “deal” segments on morning TV, and the other about doctors as product experts on television.)

Another prong of our investigation focused on a segment from the CBS daytime show, The Talk. In this March 2018 segment, a dermatologist conducts a beauty care quiz with the co-hosts and the audience.

After several general questions, the dermatologist casually mentions a particular product line, No7, and discusses the benefits of it. The program host then introduces a consumer in the audience who tells of her positive experience with the product. Only in the credits at the end of the program is there a momentary disclosure that No7 sponsored part of the show.

*MOUSE PRINT:

So this segment which appeared to be a regular part of the program was really an infomercial of sorts. Marketers call it “product integration.”

There are several legal issues here. Was the doctor paid by the company to tout its products and was that consumer in the audience a plant?

To answer the first question, we did a little digging. On The Talk‘s website, CBS offered this description of that beauty segment:

*MOUSE PRINT:

And on the doctor’s own social media account, we found her thanking the manufacturer for selecting her to be their dermatologist spokesperson for No7:

*MOUSE PRINT:

As for the audience member who touted her results using the product, we can find no independent information about her. However, what are the odds that sitting right there in the front row was an average consumer who just happened to try the product and liked it? In all likelihood, both the doctor and audience member were paid by No7 for the appearance. And that triggers the FTC’s guidelines governing testimonials and endorsements, which require clear disclosure if those people were paid for their comments. No such disclosure was made on the program.

Equally if not more important is the lack of disclosure to the viewing audience at the time the segment was airing that it was actually sponsored content — in essence an advertisement — rather than a regular program segment. They disclosed the sponsorship only in the credits at the end of the program. Under the FCCâ€™s â€œpayolaâ€ rules, if a programâ€™s producers receive payment to feature a product, that fact must be disclosed to viewers during the program.

Also, whenever someone creates content that looks like the other material that surrounds it, but is really advertising, this is called native advertising. To keep viewers of TV shows and readers of news websites properly informed about the commercial nature of these types of offerings, the FTC’s native advertising guidelines require clear, up-front disclosure. And that is often missing or obscured.

After seeing this segment on The Talk, Consumer World contacted the West coast head of broadcast standards at CBS to remind the company of the various disclosure requirements, and ask what the network was going to do to correct the problem. Not long thereafter, the segment was quietly removed from the CBS website. And eventually, we got a reply:

“I have been advised that we have reviewed our practices and procedures and have reiterated to those involved the importance of transparency, and adhering to the applicable guidelines. You may have seen some changes on our product integrations on THE TALK, as well as some of our other programs.”

This segment on The Talk is but one example of the secret commercialization of content on TV talk and information programs. Over the years, we’ve seen other sponsored segments with often poor disclosures on The Doctors, Rachel Ray, Steve Harvey, and other shows. We hope that the FTC will direct some of its enforcement efforts to the television networks that engage in these sneaky practices.

Next week we check out a segment on the Dr. Phil show that just aired a few weeks ago.