Scam Advertisers: Are Broadcasters Responsible?

Recently in the Dallas-Ft. Worth market, a high profile heating and air conditioning company filed for bankruptcy.  In the wake of their financial collapse are several radio stations holding unpaid invoices and thousands of consumers left with worthless maintenance agreements.   What makes this situation even more interesting is the nature of the the defunct company’s advertising offer.   They were pitching a scam.  “Call me today and I’ll give you $6,000 off my cost on a new system,” the owner of the company would say in his radio spots.   When he was really feeling philanthropic, he would throw in his labor for free.  And, every one of the company’s spots ended with the tag, “Honesty above reproach.”    For illustrative purposes and for the rest of this article, I’ll refer to this company as ‘Scam Heating & Air’.

In talking to several HVAC firms in the Dallas-Ft. Worth market, I’ve learned that a number of company owners contacted local radio station management regarding the lack of veracity in Scam Air’s on-air offer.  As one company owner put it, “There’s no way any dealer can honestly discount an HVAC system by $6,000.”   So even though station leadership possibly knew that the offer was a scam or a bait-and-switch, broadcasters continued to take Scam Air’s money, year-after-year.   As long as the check was clearing, broadcasters turned a blind eye to the Scam Air’s incredulous on-air offer.   In the interest of full transparency, I need to disclose that, for a short period of time, I allowed Scam Air to advertise on a station I managed.

So now, as the dust settles on this Scam Air’s demise, I’m betting that local broadcast management is asking themselves some tough questions.   Was the revenue that broadcasters received worth the damage done to thousands of their listeners?  Why was a spot advertiser airing fraudulent creative allowed to advertise for an extended period?   What could be done differently to prevent this from happening again?

Since broadcasting ‘sold out’ to the highest bidder in the deregulation of 1996, pressures on the sales division have increased exponentially.  Sales managers have to meet their quarterly numbers or they’ll be gone.    I know.  I was part of this machine for years.   And unless someone’s blatantly breaking the law with their business or their creative, pretty much anything goes on air.   And Scam Air’s just one example.   Broadcasters everywhere run copy for magic male enhancement pills or rare coin offers that are total scams.

Another example of a scam-running-rampant on television are the ‘clean up and speed up your PC programs’.  They’re on older skewing networks targeting unsophisticated computer users with offers of a miracle clean up of their computers.  According to ARS Technica, a leading technology website, a majority of these programs are a scam.  They often make routine cookie and temporary internet files look like viruses.  In some cases, the clean up programs are malware themselves.   Meanwhile television networks take the scam commercials without batting an eye.

As a broadcaster and agency owner, I’m troubled by our lack of standards of a number of levels.  By turning a blind eye to bad deals for consumers, we’re ultimately undermining our listener’s trust in our stations.   Longer term, our lack of standards and practices could make it easier for government regulation to creep further into our lives.   A chilling example of this is occurring in the financial world as the Consumer Financial Protection Bureau, a product of the Dodd-Frank Act, is threatening to regulate financial planners.   All it takes is a couple of well orchestrated class action suits aimed at advertisers or even broadcasters themselves to make us a target of increased regulation.

A much easier and more pleasant road for broadcasters and agencies to follow would be one of self-regulation.  As an industry we need to look deeper in the business models of our advertisers.   Instead of looking for clients with big budgets, we need to look for clients who have a great value proposition for our listeners.   When listeners win, we win.   By the way, ferreting out scams is not a difficult process in many cases.  In both of the case studies I’ve cited above, routine investigations would have exposed the advertiser scam.

If you’re a broadcast sales seller or a manager, let me encourage you to pick your prospects and target accounts with care.   Can we catch every bad apple from hitting our airwaves?   Probably not.  And, ultimately consumers do have a responsibility to assume the ‘buyer beware’ posture when responding to any advertisement.   Still, if we search appropriately, there is an abundance of companies who can truly offer an outstanding product or service of value to our listeners and viewers.   Dig deeper in your prospecting efforts.  The effort will be well worth it.

Pete Thomson

CEO – McQ Media

Dallas, Texas

Editor’s Note:  Pete Thomson is veteran of broadcasting and media management.  He is President/CEO of McQ Media,  a full-service advertising and marketing firm in Dallas-Ft. Worth, Texas.  Thomson describes McQ Media as a ’boutique’ firm, that only represents firms who are best-in-category.  McQ Media produces a consumer advocacy program called, The Consumer Team, which airs Saturdays 5-7PM on KRLD Radio.  Like McQ Media, The Consumer Team only features companies that are ‘best in category’ that also have a strong record of positive customer service.