Infomercial huckster Kevin Trudeau is off to prison for a decade, but consumers aren’t getting any reprieve when it comes to scams, ripoffs and frauds.
Instead, they will just find those problems in new places and from new crooks.
The question is why consumers and investors continue falling for some of the oldest tricks in the book, and a quick look at Trudeau’s situation shows why the jailing of one huckster — or of a thousand swindlers — won’t keep ordinary folks from falling prey to scoundrels.
If you don’t know who Kevin Trudeau is, chances are you sleep well at night. Insomniacs, night owls and people who wake up before the crack of dawn, have had a hard time turning on their television without seeing his infomercials promising access to “secrets” that “they” don’t want you to know.
He started by targeting people’s health fears — “The Weight Loss Cure ‘They’ Don’t Want You to Know About” and “Natural Cures ‘They’ Don’t Want You to Know About” — but when the Federal Trade Commission went after him for false claims in those areas, he turned his attentions to money, hawking “Debt Cures ‘They’ Don’t Want You to Know About.” (See Shell-out game for my 2007 analysis of that program.)
Trudeau was sentenced Monday to 10 years in prison for bilking consumers with his best-selling weight-loss book. The 50-year-old TV pitchman has been in jail since November, when he was convicted of criminal contempt for defying a 2004 court order that barred him from running false ads about the book; prosecutors said that Trudeau violated the order by airing the infomercial at least 32,000 times.
In other words, he directly ignored the restrictions about 10 times per day, while suggesting he was following the court’s order by turning his focus to debt issues.
U.S. District Judge Ronald Guzman said before sentencing that for decades Trudeau had “steadfastly attempted to cheat others for his own personal gain.”
The weight-loss book — which sold more than 850,000 copies and generated nearly $40 million in revenue, according to prosecutors — was the focus of the criminal conviction and a related Federal Trade Commission civil case in which Trudeau was ordered to pay a $37 million judgment, money Trudeau says he can’t put up because he’s broke.
Pitchman Kevin Trudeau sentenced to 10 years
Infomercial pitchman Kevin Trudeau, who amassed his fortune with multimillion sellers like "Natural Cures 'They' Don't Want You to Know About," is heading to federal prison for 10 years for misleading consumers. Chuck Jaffe discusses. Photo: AP.
Trudeau’s lawyers argued that their client should only be charged with defrauding 67 customers, the number of buyers who complained to consumer protection agencies.
Moreover, lawyers claimed that the harm to any one individual would have been less than $30 — the cost of the books — since no one can claim that his actions “shattered lives.”
Indeed, it’s probably fair to say that Trudeau didn’t send anyone to the poor house.
But the claim of the lawyers that the losses were less than $30 also shows part of the problem here. The books cost $30, but then there was shipping and handling (that struck me as particularly odd for the debt book: Trudeau argued in his infomercial that banks should simply include all fees as part of the “interest” being paid, so he should have lumped transport costs into the price of the book), and the $9.95 a month that consumers who bought the book were typically charged to get supporting newsletters.
There were also serious opportunity costs for Trudeau’s victims. If you had a debt problem, bought the book and the services and wound up about $250 further in debt to Trudeau, you could also have spent months not taking the serious steps necessary to get out of debt. Once you realized his cure was mostly a placebo, you still had to go through the hard work of belt-tightening and expense-cutting to get the debts under control.
But the real lesson in the Trudeau case is the oldest one: If something sounds too good to be true, it usually is.
So while Trudeau’s time in the pokey will stop his efforts, it won’t stop the next bad guys.
Trudeau and others like him give their pitches the proper air of believability. It was hard to watch Trudeau’s infomercials — even with a skeptical eye — and not see something that piqued your interest; you can know it’s a rip-off and still find the message believable enough to wonder if it might be real.
Get sucked in, and you could be the next person taking a chance. (And it is worth pointing out that Trudeau still has his supporters, people who say they were helped by his books.)
So as Kevin Trudeau fades into obscurity, he leaves behind some key points to remember:
1) There are no “secrets” anymore. Oh, people, industries and governments have secrets, but in well-covered industries like health care or personal finance, the vital information is out there and available. It might be new to you — or to the masses — but there’s nothing secret about it (and if it was secret, the author, seller or broker behind it would be keeping it secret instead of selling it to a mass-market audience).
2) Quick fixes are Band-Aids, not cures. It generally takes a long time to get into financial trouble and to recognize it. You didn’t fall behind in retirement savings overnight, or amass too much credit-card debt in a matter of weeks and, barring a winning lottery ticket, you shouldn’t expect to get out of trouble that quickly either.
Quick fixes and get-rich-quick ideas are too good to be true; don’t let wishful thinking overpower your ears.
3) Technically, everyone is out to get you, so stop worrying about “them” so much. Consumers shouldn’t miss the irony of a sharper like Trudeau selling books based on what the mysterious, all-powerful “they” don’t want you to know; he was out to get you at least as much as “they” were.
Conspiracy theories make great conversation but bad money-management strategy. In truth, business is involved on all sides; yes, there are companies that profit if you stay in debt, but there are others who profit as you get out of debt. Some businesses profit because people are obese; others benefit from people losing weight.
Your actions — not theirs — decide who profits from you; worry less about “them” and more about yourself, because no one has your best interests at heart the way you do.
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