CONSUMER CORNER: Infomercials - What "They" Do Want You to Know by Alan Marx

Kevin Mark Trudeau is 51 years old.  Stories on the internet claim that he was voted “Most Likely to Succeed” by his high school class in 1981.  He has had many roles in the years since, including best-selling author, radio personality, infomercial host, and salesman.  His books include:

Natural Cures “They” Don’t Want You to Know About,

More Natural Cures Revealed: Previously Censored Brand Name Products That Cure Disease; The Weight-Loss Cure "They" Don't Want You to Know About, and

Debt Cures "They" Don't Want You to Know About.

Natural Cures “They” Don’t Want You to Know About sold 5 million copies and was listed in 2005 on the New York Times as the number-one selling nonfiction book in the United States for 25 weeks. More Natural Cures Revealed was number 2 on The New York Times list of best-selling hardcover advice books during a week in September 2007 and number 3 on The Wall Street Journal’s nonfiction list, according to a 2007 article in The New York Times.

Trudeau has promoted audio tapes for Mega Memory and Advanced Mega Memory, which were advertised with the claim that users could achieve a photographic memory.  He also promoted “hair farming,” which was supposed to "finally end baldness in the human race."  In the United Kingdom he hosted an infomercial for the "Perfect Lift," a non-surgical face lift.

If you have watched television during the past 20 years, it is highly likely that you saw Trudeau pitching one of his books, audio tapes, or other products.  Along the way Trudeau made millions of dollars.  At one time he claimed ownership of 10 cars and dozens of houses and condominiums around the world.  He is not lacking in promotional skills, being described by one of his former associates as a man who could sell anything and a marketing genius.

So, by now you may be wondering what Kevin Trudeau is doing in an article about consumer protection.  The answer to that question began to emerge fairly early in his career.

After high school, while working at a car dealership, Trudeau met the owner of a company called Memory Masters Institute and went to work for Memory Masters in Chicago.  However, he soon ran into trouble.  In 1990 Trudeau was accused of posing as a doctor to deposit $80,000 in false checks, and in 1991 he pleaded guilty to larceny.  That year he also faced federal charges of credit card fraud, based on an allegation that he stole the names and Social Security numbers of customers of a mega memory product and charged more than $122,000 on their credit cards.  He was convicted and spent two years in federal prison.  Trudeau has described these matters as youthful indiscretions, partly the fault of other people, a series of math errors, and a mistake by a bank official.

When he was released from prison Trudeau formed Trudeau Marketing Group to sell nutritional supplements and skin care products, working with Nutrition for Life, a multi-level marketing firm.  Nutrition for Life and Trudeau eventually settled cases brought by the state of Illinois and seven other states challenging the multi-level marketing as a pyramid scheme.

About that time Trudeau found his gold mine, late night television infomercials in which he promoted products and services that included health aids, memory improvement courses, dietary supplements, baldness remedies, addiction treatments, and more.  By 1998 his actions had come under scrutiny at the Federal Trade Commission (“FTC), which enforces consumer protection laws against making misrepresentations and unsubstantiated claims in advertising.  The FTC fined him $500,000 for the claims made in six of his infomercials, including a claim that the “hair farming system” that he promoted would “finally end baldness in the human race.”

Going forward, Trudeau’s marketing promotions constantly were entangled with FTC enforcement proceedings and court actions.  In 2003 the FTC filed a case against Trudeau and some of his companies alleging that they had made false and unsubstantiated disease related claims for Coral Calcium Supreme, which has been promoted as a treatment or cure for a number of health conditions, including cancer, despite no medical evidence that supports those claims.

Trudeau tried to settle the case by agreeing to the entry of a preliminary injunction that prohibited him from making similar claims for the product, but despite the settlement, Trudeau did not change his conduct.  His refusal to comply with court orders entered following FTC actions against him and his companies became his trademark.  Judges react badly when defendants willfully fail to follow their orders, and courts have a very powerful tool to enforce those orders, the power of contempt of court.

In 2004 Trudeau settled a contempt of court action that came from his failure to comply with court orders.  He agreed to pay a $2 million fine and accepted a ban on infomercials that promoted any product other than publications, such as books, that were protected by the First Amendment.  While the orders did not ban his sales of First Amendment materials, he was not immune for further enforcement actions if the books he was promoting contained false and misleading claims about health or other benefits.

Trudeau then began to write and sometimes self-publish books, which he promoted through his infomercials.  He was very successful.  As noted earlier, his first book, Natural Cures “They” Don’t Want You to Know About, was a best seller, even though it was criticized for not containing any “natural cures.”  More books and infomercials followed, but so did the frequent criticisms that his books made unsubstantiated claims or, in some cases, false claims.  For example, in one of the books Trudeau claimed that a Canadian university had studied a natural cure for diabetes.  When questioned by a television network news program about the study, the university said there had been no human studies on herbal remedies for diabetes conducted there in the past 20 years.

In 2007 the FTC filed a contempt of court action over another Trudeau book, Weight Loss Cure “They” Don’t Want You to Know About, alleging that the book was in violation of a court order for deceptively claiming in infomercials that the weight loss program is “easy” to follow.  According to the FTC, the claim was made that the weight loss plan can be done at home and that readers can eat anything they want.  The FTC said that, to the contrary, the plan is complex, requires intense and extreme dieting (500 calories a day), a daily injection of a prescription drug, and lifelong dietary limits.  In finding Trudeau in contempt in November of 2007, the federal judge said he had misled thousands of consumers.

In 2008 Trudeau was barred for three years from appearing in infomercials for products in which he had any interest and was ordered to pay a penalty of more than $5 million dollars, based on the estimated royalties he had received from the book.  In November of 2008 the amount was amended to $37,616,161, based on what consumers paid in response to the infomercials.  The damage award was affirmed on appeal, with the appellate court finding that the fine was appropriate because, based on a conservative estimate, Trudeau had run 32,000 infomercials for the book.

In September and October of 2013 Trudeau was jailed for civil contempt for failure to comply with court orders regarding his personal spending, for failure to cooperate with a court-appointed receiver who was trying to establish Trudeau’s wealth, and for failure to pay the outstanding fine.  In November he was found guilty of criminal contempt for violating his 2004 agreement regarding the claims he made in support of his weight loss book.

Finally, in March of 2014 Trudeau came before a federal judge at a sentencing hearing for not paying the $37 million fine. His attorney, Tom Kirsch, asked for a sentence of less than two years, saying that the harm Trudeau caused was minor compared to fraud in which people are cheated out of their life savings.  Kirsch said a 10-year sentence might be appropriate for a defendant who destroyed lives, but if Trudeau swindled anyone, he only swindled them out of $30, the price of the book.

Another defense attorney, Carolyn Gurland, argued that Trudeau's legal troubles had already cost him nearly all of his worldly possessions, including his business and his home.  The FTC in a civil case had rejected that claim, accusing Trudeau of hiding money in shell companies and of spending lavishly in recent years, including $359 for two haircuts.

Trudeau was sentenced to 10 years in prison for not paying the $37 million in fines. During the sentencing hearing, the federal judge described Trudeau as a habitual fraudster from his early adulthood, called him “deceitful to the very core,” and said that Trudeau had thumbed his nose at the justice system by violating multiple court orders since the 1990s.  "He has treated federal court orders as if they were mere suggestions ... or impediments to be side-stepped, out-maneuvered or just ignored," the judge said.

Conclusion

Trudeau was consistent throughout his career.  He took money from many people who bought his books and audio tapes believing the information he provided was true, but in fact Trudeau repeatedly failed to provide substantiation for claims he made for medical, health, financial, and diet benefits, among others.  When challenged by regulators and courts, he simply ignored or evaded them and continued on his way.  His attorney’s attempt to justify Trudeau’s actions by saying that he only took a little bit from many people, not everything from a few, is particularly appalling.

Why read about Trudeau?  By now you probably have noticed that in the consumer protection area, far too often the end of the story is unsatisfying.  Bad guys get away, enforcement authorities struggle to catch up and find themselves several steps behind, and consumers, many of whom are seniors, are left holding an empty bag.  Kevin Trudeau’s activities went on for a very long time, but in the end he has had to pay the piper.  At least in this instance the outcome is encouraging.