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First, there’s section 255.2(a), that would really put pressure on Porter Stansberry’s business and – if it hasn’t in the past – it will now:
“An advertisement employing endorsements by one or more consumers about the performance of an advertised product or service will be interpreted as representing that the product or service is effective for the purpose depicted in the advertisement. Therefore, the advertiser must possess and rely upon adequate substantiation, including, when appropriate, competent and reliable scientific evidence, to support such claims made through endorsements in the same manner the advertiser would be required to do if it had made the representation directly, i.e., without using endorsements. Consumer endorsements themselves are not competent and reliable scientific evidence.”
And then 255.2(b):
“An advertisement containing an endorsement relating the experience of one or more consumers on a central or key attribute of the product or service also will likely be interpreted as representing that the endorser’s experience is representative of what consumers will generally achieve with the advertised product or service in actual, albeit variable, conditions of use. Therefore, an advertiser should possess and rely upon adequate substantiation for this representation. If the advertiser does not have substantiation that the endorser’s experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.”
So, the regulations make it clear that, if “Fred from Oklahoma” of “Ms PS of Baltimore” say they made a 2000% profit from following the advice of Porter Stansberry, Dr Steve Sjuggerud, or whoever else at Stansberry & Associates Investment Research, then that claim must be substantiated: not only as true, but as representative of what customers can expect.
Stansberry on the scales
The federal regulations even give examples, such as an advertisement for a fictional weight loss product:
“If…the advertisement simply features ‘before’ and ‘after’ pictures of a woman who says ‘I lost 50 pounds in 6 months with WeightAway,’ the ad is likely to convey that her experience is representative of what consumers will generally achieve. Therefore, if consumers cannot generally expect to achieve such results, the ad should clearly and conspicuously disclose what they can expect to lose in the depicted circumstances (e.g., ‘most women who use WeightAway for six months lose at least 15 pounds’).
“If the ad features the same pictures but the testimonialist simply says, ‘I lost 50 pounds with WeightAway,’ and WeightAway users generally do not lose 50 pounds, the ad should disclose what results they do generally achieve (e.g., ‘most women who use WeightAway lose 15 pounds’)”
Thus, for all Porter Stansberry’s last decade of using testimonials, TINA’s review and complaint now make clear that his business may be tightly regulated. And, in his own unique situation, he has a particular handicap in being the subject of a court injunction. In 2007, a securities fraud judgment against him – arising from deceptive claims (including the use of a fictional name) over which he and associate businesses were ordered to disgorge $1.5 million – it was stipulated that he must avoid deception.
So what does Porter Stansberry say? His strategy comes in two parts: first formal, and then empathic.