tag:blogger.com,1999:blog-57353451963339772852024-03-13T08:47:23.335-07:00Deliberate Deception?A compendium of advertisements that could mislead consumers, compiled by economist and writer Daniel Altman.Unknownnoreply@blogger.comBlogger19125tag:blogger.com,1999:blog-5735345196333977285.post-56482221530804723992010-05-10T22:20:00.000-07:002010-05-10T22:20:36.649-07:00Hyundai: Tell the truth about your pricingOnce again, a company is making disingenuous claims about the pricing of its products. In a Hyundai television ad, the actor Jeff Bridges says, "We believe a safety feature like electronic stability control is too important to charge a premium for." So, is Bridges saying that Hyundai cars would cost exactly the same if they didn't have electronic stability control? It sure sounds like they are... but that can't be true.<br />
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The truth is that Hyundai, instead of offering electronic stability control as an option, has made it standard. As a result, the base prices for Hyundai's cars are higher. Don't believe me? Well, imagine if Hyundai decided to make gold-plated steering wheels standard, too. Do you think its base prices would be higher then?<br />
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No premium, my foot.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5735345196333977285.post-42421889083508768712010-04-20T14:35:00.000-07:002010-04-20T14:35:05.319-07:00The New York Times: Can you be more specific?My former employer, The New York Times, is airing television ads for its "weekender" subscription in which an actor states, "The best journalists in the world work for the Times, and there's no debating that." This is a pretty strange remark coming from a company that depends on freedom of speech for its core business. Can there really be no discussion of this apparently crucial selling point?<br />
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I think there can. Does the Times mean that the very best journalists in the entire world work there? If that's true, then all the best journalists in the world must be very good at writing in English. Or does the Times mean that all of its journalists are among the best in the world? If that's true, then you'd have a hard time explaining the not-so-distant scandals related to former Times writers. How does the Times qualify journalists as being the best, anyway? It may have won more Pulitzer prizes than any other news organization, but those awards are available only to media based in the United States... and two of the aforementioned scandals revolved around Pulitzer winners Judith Miller and Rick Bragg.<br />
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I'm always a little offended when I hear absolute statements that can't be defended. An advertiser that uses them seems to assume that consumers will accept its claims on faith. They shouldn't.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5735345196333977285.post-40210100749861760612010-03-29T10:35:00.000-07:002010-03-29T10:39:40.132-07:00Allstate: Trying to fool investors?In a new ad for Allstate, the actor Dennis Haysbert scoffs, "These days, money market funds are paying less than two percent, so forget return on investment. Let's talk about return on insurance." He goes on to say that Allstate will pay you back up to five percent of your premium at the end of the year. So insurance is a better "investment"?<br />
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Come on now. Do money market funds ever offer a big return, relative to other options? They typically pay just a couple of points above the short-term interest rates set by the Federal Reserve, because they're very safe investments. That means when the Fed's rates are low, so are money market rates. But the reverse is also true.<br />
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So, if the Fed had short-term interest rates at 6 percent, and money market funds were paying 8 percent - much more than Allstate's end-of-year "return" - would Haysbert change his tune? Actually, his comment wouldn't be any more relevant. If money market funds are paying 8 percent, corporate bonds are likely to be paying 10 percent or more. That means money market funds don't stack up any better in terms of "return on investment", whether the Fed sets rates low or high. <br />
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Allstate's "return" is actually a way to charge different premiums to people at different risk levels, <i>ex post</i>. If you don't have an accident, you pay less. Sound familiar? That's exactly the kind of "lemon-dropping" that was just made illegal for health insurance companies by the new health care reform.<br />
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P.S. One other thing - a certain company called Allstate Bank offers <a href="http://www.allstatebank.com/InsuredMoneyMarket.asp" target="_blank">money market accounts</a> of their own... and they only pay 0.35 percent.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-5735345196333977285.post-27968834101151104862010-03-28T22:33:00.000-07:002010-03-28T22:34:23.377-07:00Cash4Gold: The deception continuesNow Cash4Gold has a new pitch (see my earlier indictment of their advertising <a href="http://deliberatedeception.blogspot.com/2009/12/cash4gold-how-much-is-more.html" target="_blank">here</a>). They're offering a $50 "bonus" to anyone who sends in their old jewelry for a cash payment. A bonus over what? They don't tell you how they appraise the jewelry they receive. It seems very unlikely that they've actually changed the relationship between the amounts they pay and the prices of the precious metals they harvest. Rather, they've probably just decided to call the last $50 of each payment a "bonus", hoping that people who were on the fence about sending in their jewelry will now do so. Cynical.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-5735345196333977285.post-67393025099837263742010-03-20T16:07:00.000-07:002010-03-20T16:10:22.240-07:00Sonic: No free tater tots!It's an old economic chestnut that there's no free lunch. Anything that's worth something generally costs something - even if it's just the effort that it takes to pick an apple off a tree. And one of the most common deceptive practices in advertising is the idea that you can buy something and then get something else free. The word "free" usually doesn't belong.<br />
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A current exemplar of this unfortunate phenomenon is the fast-food chain Sonic, whose television ads are offering a "free" medium order of tater tots with the purchase of a double cheeseburger. The fact is, anyone who takes advantage of this deal is still paying one price for two items; Sonic simply decided to charge a lower price for this combination during the promotional period. In principle, that's fine - advertising based on price is one of the forms of publicity that actually provides useful information. But the word "free" is unnecessarily deceptive. Just try ordering the "free" tots on their own, and see how far you get.<br />
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(By the way, does anyone actually prefer tater tots to fries, even if they are delivered on roller skates?)Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-5735345196333977285.post-82455008627145781412010-03-18T11:02:00.000-07:002010-03-18T11:02:30.762-07:00The Hartford: Start making senseThe Hartford has joined the parade of insurance companies claiming that people who switch to their car insurance will save lots of money. For an explanation of why such claims are completely disingenuous, see my earlier post on Allstate <a href="http://deliberatedeception.blogspot.com/2009/09/allstate-your-statistics-are-not-in.html" target="_blank">here</a>. But The Hartford's new television commercial has another problem: it raises more questions than it answers.<br />
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The ad makes the big savings claim first, but the supposed clincher comes later. If you switch to The Hartford, the ad says, the company promises not to "drop" you. Of course, the actors in the commercial don't bother to specify under what circumstances or for how long this promise applies, but the really bizarre part is the context. At the very beginning of the commercial, an offscreen voice asks several actors how long they've had their current insurance. The actors say eight to ten years, or so long that they can't remember. But if that's true, are these make-believe people really in danger of being "dropped"? Their current make-believe insurers certainly don't seem to think so. I have to ask, why does The Hartford even need to make this claim? Is the company notorious for dropping people after they have accidents? That's something <i>real</i> customers would probably want to know.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5735345196333977285.post-45002641019250208582010-03-10T18:01:00.000-08:002010-03-10T18:01:07.523-08:00Cisco Systems: What if the MAYOR is a fake?If you've read my previous post, then you already know that I'm concerned about people posing as experts and endorsing products. Add another category of deliberate deception: people posing as authority figures and endorsing products. Cisco Systems is running a television ad in which the actress Ellen Page supposedly returns to her hometown of Lunenberg, Nova Scotia. The "mayor" greets her and enthusiastically shows her the small town's new police department, which consists of a room with one officer and a Cisco-supplied system of electronic surveillance.<br />
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The problem is, he's not really the mayor. The real mayor of Lunenberg is the Rev. Lawrence Mawhinney, a Presbyterian minister who has worn the mayoral hat <a href="http://www.southshorenow.ca/archives/2009/122909/news/index015.php" target="_blank">since 1979</a>. So, does the real mayor actually endorse Cisco's products? Does he know that a younger, bald man is impersonating him on American television? Does Lunenberg even have a high-tech surveillance system made by Cisco?<br />
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Your guess is as good as mine. However, I did find out that Lunenberg <a href="http://www.explorelunenburg.ca/police-and-fire.html" target="_blank">does <i>not</i> have its own police department</a>. The city relies on the Mounties instead.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5735345196333977285.post-54877046617298852862010-03-10T11:16:00.000-08:002010-03-10T11:16:43.910-08:00Taco Bell: Can you tell the expert is a fake?Plenty of television commercials contain dramatizations and ridiculous situations that can't possibly be real. But when a commercial skirts the line between reality and make-believe, does it become deceptive? I think it can, especially when the protagonist is portrayed as an expert who recommends the product being peddled.<br />
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To wit: Taco Bell is running a television ad with a supposed "shrimp blogger" who discovers the chain's new shrimp taco. It's so good, he says, that he doesn't know whether to blog about it or keep it to himself. Is this obviously ridiculous? Not quite. It's entirely possible that someone in the world blogs only about shrimp. Could a post on a blog cause Taco Bell to sell out of its shrimp tacos? Well, if the mainstream media picked it up, then sure, why not?<br />
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The problem is, some consumers might actually believe that this rugged gentleman with an antipodean accent really is an expert on shrimp. He's not - he claims to have blogged about and eaten something called a "Hercules shrimp", which doesn't exist. But what consumer would have gone to the trouble to check that little factoid? If any consumers do end up believing that Taco Bell has found a real shrimp expert to recommend their product, then this is deliberate, or at least negligent, deception.Unknownnoreply@blogger.com15tag:blogger.com,1999:blog-5735345196333977285.post-64372596683873134542010-03-05T15:31:00.000-08:002010-03-19T14:03:31.081-07:00American Beverage Association: They WHAT?New York State is considering a tax on sugary soft drinks, and the American Beverage Association (you can guess <a href="http://www.ameribev.org/about-aba/board-of-directors/" target="_blank">who</a> funds them) is running television ads opposing the tax. The ads have a man described as a New York minimarket owner saying that the tax will hurt his customers and his business. In fact, he says, his customers are on such tight budgets that "the majority of them" come into his shop with "notepads and calculators." Really?<br />
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Actually, it doesn't matter if he's exaggerating. The state is considering the tax because some politicians think that sugary soft drinks contribute to obesity, which ends up costing taxpayers money through higher costs in government health insurance. If the politicians are right, sugary soft drinks are like cigarettes and alcohol; consuming them makes other people worse off, so it's better for society if you don't consume as many of them as you'd like. That's the argument that the American Beverage Association should be trying to disprove, with scientific research and budgetary studies. But they're not - they're talking about notepads and calculators instead.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5735345196333977285.post-3726264058838710472010-03-02T00:14:00.000-08:002010-03-02T00:14:59.887-08:00U.S. Marine Corps: Not so exclusive after allThe Marine Corps has a relatively new ad campaign called "America's Few" (read about it <a href="http://www.quantico.usmc.mil/Sentry/StoryView.aspx?SID=3325" target="_blank">here</a>). Television spots currently airing claim that many Americans will hear the call to serve, but few will become Marines. That's not exactly true. Figures from past years (I found various sources from the 1980s through 2000, though only anecdotal sources for more recent years) suggest that 85 to 90 percent of recruits do in fact make it through training and become Marines. The vast majority of those who don't are rejected for medical reasons. Now, this may be a testament to the effectiveness of military training or the selectiveness of military recruiting. Indeed, you wouldn't want the Marine Corps's training program to waste a lot of money on recruits who couldn't make the cut. Exclusive, however, it is not.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-5735345196333977285.post-13250333830108875042010-01-28T20:24:00.000-08:002010-01-28T21:41:53.763-08:00Michelin: A meaningless claimMichelin's television commercials for its A/S "Energy Saver" tires say that putting the tires on your car can save you up to 109 gallons of fuel. By itself, this number doesn't mean anything. Is it 109 gallons per year, or over the life of the tires? If the latter, how long is the life of the tires? What kind of car and tires do you have to have now in order for that number to be correct?<br />
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The fine print says you'd need to drive 55,000 miles on the Michelin tires to realize the fuel savings, which are estimated versus a specific Bridgestone tire, the Turanza. So, if you buy the A/S instead of the Turanza, you might save about $300 over five years of regular driving. Here's the kicker: a quick check on Google shows that the Turanza sells for about $100 less per tire than the A/S, or $400 less per set - more than the supposed fuel savings. Moreover, by buying the Turanza you'd pay $400 less up front, instead of waiting five years to save $300 on gas with the A/S. It's not such a great deal after all.<br />
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Putting the potential savings aside, is this good advertising? If you don't read the fine print, the ad's spoken claim is so vague that it's impossible to evaluate. Moreover, the <a href="http://www.michelinman.com/the-right-tire/" target="_blank">Michelin web page</a> that cites the same 109-gallon figure doesn't even have any fine print - truly advertising at its worst.Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-5735345196333977285.post-45467515985199911392010-01-16T10:33:00.000-08:002010-01-16T10:42:44.837-08:00First Liberty Financial: Lessons not learnedFirst Liberty Financial is running ads on television that take the form of fake news briefs. The top story? According to the ad, the federal government has pushed down interest rates on home loans insured by the Federal Housing Administration to all-time lows. This is untrue in both fact and concept. The federal government does not directly control long-term interest rates like those on home loans. The Federal Reserve controls short-term rates, and the Congress controls spending and debt levels; both may affect long-term interest rates, but so can a million other factors. But regardless of what you think about why long-term interest rates move up and down, one thing is true: today, interest rates on home loans are not at their all-time lows. As <a href="http://research.stlouisfed.org/fred2/series/WRMORTG" target="_blank">this graph</a> shows, rates for 30-year mortgages are about half a point above their recent lows. It's a shame, but the cheap mortgage industry seems just as deceptive as ever.<br />
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By the way, the Federal Housing Administration, a New Deal program in operation since 1934, only insures about 5 million mortgages in the United States. Though it does set limits on the size of the loans it will insure and the ability of the borrower to pay, it does not set any limits on interest rates.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5735345196333977285.post-62430325340714850742009-12-12T23:22:00.000-08:002009-12-12T23:25:03.901-08:00Cash4Gold: How much is more?American television is filled with commercials for companies that will turn your old gold jewelry into cash. You just send it in, and they send you a check, with no obligation to accept the deal. It sounds straightforward enough, but the ads are a little misleading. At the moment, Cash4Gold says it's offering a 25 percent bonus over its usual rates, presumably to entice consumers to try and grab that extra cash. Yet in general, such claims are too vague to mean anything; you have to ask, "25 percent more than what?" Cash4Gold never says what its regular rates are, nor do it say how often its regular rates change. This is an important issue, since the price of gold has risen by 37 percent in the last year. If consumers are getting 25 percent more than they did this time last year, Cash4Gold is pocketing the other 12 percent... but there's no way to know from the ads.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5735345196333977285.post-32412116317798066882009-12-12T23:17:00.000-08:002009-12-12T23:26:00.326-08:00AT&T versus Verizon: Apples and oranges?Verizon has been slamming AT&T in its television commercials with claims that AT&T's third-generation wireless network offers far less coverage than Verizon's. The Verizon coverage map for the United States certainly looks a lot more comprehensive than AT&T's. But now, AT&T is responding with ads showing another, much more flattering map of its coverage (and the actor Luke Wilson running down a long list of the cities that the map includes). The AT&T commercials, however, do not specify that the coverage is on a third-generation network; it looks as though AT&T's claims may rest on its garden-variety mobile phone network. Is AT&T really countering Verizon's ads in such a disingenuous way? Wait for the next round to find out.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5735345196333977285.post-85652218190946437622009-10-04T20:19:00.000-07:002009-12-12T23:28:28.031-08:00Local 1549: A little context would helpOn the New York City subway, union Local 1549 has been running an ad complaining that the city is wastefully transferring police officers to desk jobs instead of putting them on the street. The ad states that a cop earns about $74,000, much more than the $37,000 that would be paid to a clerical worker to do the same job.<br />
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The union, which represents New York City clerical and administrative workers, is appealing to subway riders' sense of logic: wouldn't it be cheaper (and safer) to leave the cops on the street, and have civilians doing the desk jobs? Maybe not. If the city is trying to save money, it might be under pressure to cut payrolls. It doesn't want to let any cops go - that's politically controversial - so it hires fewer civilians and offers the desk jobs to cops. For the cops, a desk job is still probably better than no job, and the city does save money. But the clerical workers end up out in the cold... hence the ad. Now, the union might be right when it suggests that the city is less safe with fewer cops on the street. Even if that's true, however, hiring more clerical workers might not be the most cost-effective solution.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-5735345196333977285.post-32627546553254270032009-09-16T16:23:00.000-07:002009-09-16T16:23:34.186-07:00Honda: Be careful with those superlativesIn Honda's television commercial for its Pilot sport-utility vehicle, the company calls itself "The Greenest Automaker in America." Obviously, the word "greenest" is open to many interpretations. Some years ago, you might have thought that it meant Honda manufactured the most cars that were painted green. But these days, the word conveys a different meaning: ecological, friendly to the environment, using less energy or built for alternative fuels.<br />
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Now, I couldn't read the fine print on my television - it was too small, and, even if the commercial was in high definition, I don't have it yet. Yet the claim of "greenest" doesn't pass the fresh-cut grass smell test. Is Honda aware, for example, of an American automaker called Tesla Motors? All its cars are completely electric and can outperform most models in the Honda line-up. They cost more, but they charge up quickly and have a range of over 200 miles. Meanwhile, even the most efficient Pilot (the two-wheel-drive model) gets an average of only 19 miles per gallon. That's not bad for a 3.5-liter behemoth, but, given the selection of hybrid SUVs on the market, it's not exactly green, either.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5735345196333977285.post-71202707173094596342009-09-15T18:06:00.000-07:002009-09-15T18:07:58.666-07:00Chrysler: Isn't word choice wonderful?A television commercial for Chrysler's 2010 Town and Country minivan currently advertises "unsurpassed fuel economy in its class." Well, it's easy enough to go to www.fueleconomy.gov and see just how efficient the Town and Country really is. Turns out its most efficient engine gets 17 miles per gallon in the city (town?) and 25 on the highway (country?), for an average of 20. But guess what: the Honda Odyssey and the Volkswagen Routan have <i>exactly the same</i> fuel economy ratings. That's why the Chrysler is "unsurpassed" and not "uniquely the best." Watch out for Honda and Volkswagen commercials advertising the same thing....Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5735345196333977285.post-38720543424155944682009-09-12T23:59:00.000-07:002009-09-13T00:18:08.351-07:00Expo Markers: Stingy or selfless?Expo Markers has a new television ad starring actor Kyle Chandler. He begins by telling viewers that teachers spend as much as $500 annually on classroom supplies that their schools don't provide. He also says that Expo markers are near the top of their shopping list, a vague claim that would be tough to prove or disprove. He then encourages viewers to nominate inspiring teachers for a competition sponsored by the brand, adding that ten winning teachers will receive help with their expenses.<br />
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Expo likely wants viewers to think of their brand as altruistic and socially conscious, generating goodwill for the brand and more sales. But how much are they really doing for teachers? It sounds like they are willing to pay out a maximum of $5,000 (that's $500 each for ten teachers) to help our inspiring educators. That sum almost certainly pales in comparison to the cost of hiring Mr. Chandler, and it seems even tinier relative to the cost of purchasing time on network television. If anything, Expo seems pretty stingy - the opposite of the image they're probably hoping to create among consumers.Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-5735345196333977285.post-18117640064643888572009-09-12T23:48:00.000-07:002009-09-13T00:13:29.563-07:00Allstate: Your statistics are not in good handsAllstate is running a television ad in which its spokesman, the actor Dennis Haysbert, states that drivers who switched from Geico to Allstate for their car insurance saved an average of $473 a year.<br />
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What Haysbert doesn't say is that you probably wouldn't switch from one insurance company to another if you weren't going to save some money. In fact, even if you were going to save a small amount, say $50, then you might not bother to switch. So it's not surprising that the customers who switched saved a good deal of money. It would be more interesting to know how big the average savings would be if <i>all</i> Geico customers switched to Allstate. In fact, we have no idea how many Geico customers switched. For all we know, the vast majority of them were happy with the insurance they had. Some argument for switching, eh?Unknownnoreply@blogger.com0