Fooled by ads that looked like news
Plus: BJ's in Midtown sold for $32M, but future is unclear; Apartment towers envisioned near Olde Meck; Charlotte gets 4 seconds in Super Bowl beer ad
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Deceptive ads on Charlotte TV and radio? Local media are pushing the limits of sponsored content, new lawsuit suggests
In a new lawsuit, nine investors who collectively lost hundreds of thousands of dollars in retirement savings say they entrusted their money to financial adviser Jim Heafner after learning about him from his appearances on Charlotte TV and radio stations.
In many cases, the victims — all in their 50s and 60s — believed Heafner had been invited on the programs because of his financial expertise, and they trusted the hosts of the programs and the solid reputation of the stations. In reality, though, the segments featuring Heafner were often paid ads that resembled news segments.
“My clients’ allegations are that at the time that they were viewing those appearances, they were not aware that he was appearing in an advertisement but believed he was an invited-on expert,” said Chicago lawyer Adam Marquardt, in an interview with The Ledger.
Why it matters: The distinction between advertising and editorial content is important because viewers might have been less likely to hire Heafner if they knew his segments were paid ads. In addition, the Federal Trade Commission has held that “advertising and promotional messages that are not identifiable as advertising to consumers are deceptive if they mislead consumers into believing they are independent, impartial, or not from the sponsoring advertiser itself.”
In the lawsuit, all nine say they learned about Heafner from his appearances on WBT radio or WBTV, although he also appeared in recent years in segments on WCNC and WSOC.
Financial adviser Jim Heafner (right) appeared regularly on local TV and radio programs, including this 2017 segment on WBTV’s “Morning Break.” WBTV has said Heafner’s appearances were “paid, sponsored content,” but there’s nothing in the four-minute segment to indicate that.
Background: The suit, filed against Heafner and the brokerage he affiliated with, Georgia-based Retirement Wealth Advisors, is the latest legal action stemming from investments in a Florida company called 1 Global. Heafner recommended that many of his clients invest retirement savings in the company, and the suit says he told clients to expect a 9% annual rate of return. However, the Securities and Exchange Commission later alleged 1 Global mismanaged or misallocated the money, and it filed for bankruptcy protection. That caused many of Heafner’s clients to lose a lot of money — though they will recoup a portion of it in the bankruptcy process.
As you might expect, the case has turned into a legal mess: Heafner says 1 Global appeared to be a solid investment, that its implosion was unforeseeable and that even he lost money in it. Lawyers for his clients say he missed red flags and had no business recommending such a risky investment to people at or approaching retirement age. The industry’s regulatory body sanctioned Heafner, and he has been the subject of several complaints from former clients.
Media was #1 source: Heafner, in an interview with The Ledger in September, said the media was the top source of new clients. He added: “In most businesses, the biggest challenge is distinguishing yourself from somebody else. … Marketing is really an important thing in the business. I think I did a pretty good job of it.”
Although most people probably think of TV commercials as the 30-second spots that allow you to go to the bathroom or do errands around the house while you wait for your program to return, many viewers might not realize that most Charlotte TV stations now have programs that blur the line between ordinary programming and ads by allowing advertisers to buy time on programs in ways that don’t look like traditional advertising. It’s known as “sponsored content,” or sometimes derisively as “pay to play.” If you watch some of these programs, you’ll see long segments that companies have paid for to promote products in healthcare, financial services and home improvement. [Updated 2/3/2010 6:50am]
Selling ‘Charlotte Today’: For instance, a promotional flier for WCNC’s “Charlotte Today” obtained by The Ledger shows the station is promoting the program hosted by Eugene Robinson and Colleen Odegaard as providing “Solutions for Your Unique Business Needs” at a cost of $1,995 per segment with a three-segment minimum:
In a “Charlotte Today” segment still available online, Robinson and Odegaard interview Heafner for 4 minutes and 45 seconds, and Odegaard — a former news anchor at the station — tells viewers “you need to work with a trusted financial professional like Jim Heafner — call him!” The only indication that it’s a paid ad is a note at the bottom of the screen for the first 7 seconds of the segment that says “Sponsored by Heafner Financial.” It also includes Heafner Financial’s phone number on the screen.
Sponsored content at WBTV: In WBTV’s case, when the news broke in March about Heafner’s connection to 1 Global, the station ran an article with the disclaimer that the financial adviser appeared “as paid, sponsored content. The segment was labeled that way in the show and in credits.”
That appears to be not entirely true. A 4-minute, 6-second Heafner appearance on WBTV’s “Morning Break” from 2017 that is available online gives no indication it’s a paid ad. The station renamed the show “QC Morning” last year and said it would “continue delivering a mix of editorial and sponsored content.”
Studio name at WBT: Heafner appearances on WBT radio don’t appear to be available online. But an article on the station’s website says “WBT marked its growing relationship with Heafner Financial by naming the historic studio the WBT Heafner Financial Studios.” The July 2018 ceremony was marked on-air with two news hosts and “finished with a cake to officially announce the new studio naming.” In the lawsuit, a couple who lost $250,000 in 1 Global said “they recall [Heafner’s] tagline and WBT hosts endorsing him as a retirement specialist.”
Ledger’s take: Media shouldn’t be held responsible for the actions of their advertisers. But they should be held responsible for making sure their readers, viewers or listeners know that advertisers are advertisers.
Matt Hanlon, market manager for WBT parent company Entercom, said in an interview that he believes listeners can distinguish between paid and editorial content. Many of WBT’s weekend programs are sponsored, and that information is “right on the website — you can see which ones are and which one are not,” he said. [Updated 1/29/2020, 3:44 p.m., to include Hanlon comments]
WBTV’s station manager, Scott Dempsey, didn’t return an email on Tuesday.
According to the lawsuit, the nine plaintiffs include a retired funeral-services company worker, an unemployed engineer and his restaurant-manager wife and a retired teacher. Heafner steered each of them to invest between $94,000 and $250,000 in 1 Global, the suit says.
One of them, a 66-year-old Duke Energy worker who heard about Heafner from WBT, made an appointment after seeing him on WBTV, “as [he] believed the longest running Charlotte station would invite on trusted experts.”
Learn more: Read the full lawsuit on The Ledger’s website.
The last days of BJ’s
The shelves are bare at BJ’s Wholesale Club in Midtown, as the store announced this month that it is closing. Property records show the site was sold in late November to a New York real estate investor for $31.8M — which indicates that something is probably in the works. But what? The buyer didn’t return a call this week. Charlotte residents brainstormed on Twitter about what they’d like to see take its place. Suggestions included a roller rink, a data center, an indoor market with multiple vendors, a brewery, an indoor MLS training facility and a “huge tanning salon with UV lamps everywhere so you don’t have to lie in a bed, but can move about freely doing other things while you get cooked.”
Today’s supporting sponsors are The McIntosh Law Firm/Carolina Revaluation Services and The Charlotte Ledger’s 40 Over 40 awards (nominations close Friday):
In brief
LoSo apartment towers? Developers have told city planners that they’re thinking about building apartments on Verbena Street, around the corner from Olde Mecklenburg Brewery. They would be on a 4.8-acre parcel owned by Charlotte Van & Storage at 213 Verbuena St. and would redevelop the site with “two multifamily buildings, associated surface parking, access drives, and tenant amenity areas. Total of 273 multifamily units,” according to city records.
New zoning: City planners expect to have a first draft of the city’s proposed new unified development ordinance in March 2021, they told council members this week, with plans for a vote on it in September 2021. It would overhaul the city’s zoning ordinance and other development regulations and direct how the city grows.
Eastland rezoning: The city of Charlotte and Crosland Southeast filed a rezoning petition for the 78-acre Eastland Mall site on Monday, city records indicate. If approved, the zoning would change to a mixed-use designation (MUDD-O and MX-2-INNOV). The purpose would be “to accommodate a mixed-use development, potentially including residential, office, retail, civic, sports entertainment, and cultural uses.” The city and the Major League Soccer team owned by David Tepper are working on a plan to put the team’s HQ and practice facilities at Eastland. Further details on the filing were not immediately available Tuesday.
No recession anytime soon: The U.S. probably won’t experience a recession until 2022 or later, Wells Fargo economist Mark Vitner told the Charlotte chapter of CoreNet, a commercial real estate group, on Tuesday. He said Charlotte’s economy is healthy and that it’s too soon to predict what effect the coronavirus will have on global growth, but that it will probably be minor. He forecast growth of 2.1% in 2020 and 2.3% in 2021.
Home sale: Former Charlotte Motor Speedway president Humpy Wheeler has sold 30 acres of land on Mountain Island Lake for $3.4M. The property in Huntersville “included Wheeler’s 2,100-square-foot home as well as undeveloped property on a peninsula fronting the lake.” (Biz Journal)
Rising housing prices: Charlotte had the second-highest year-over-year increase in housing prices in a survey of 20 cities, according to data released Tuesday. Charlotte’s prices rose 5.2% between November 2018 and November 2019, behind only Phoenix, where prices rose 5.9%. (S&P CoreLogic Case-Shiller)
Charlotte’s four seconds of fame: A 60-second Budweiser ad features a four-second clip from the 2016 Keith Lamont Scott protests uptown. The Charlotte portion shows an activist wearing a “free hugs” T-shirt embracing a police officer in riot gear. A City Council member and some people on Facebook found the Charlotte scene inappropriate, the Observer reported. Judge for yourself: the city’s moment in the sun starts at the :37 mark —> (YouTube)
Cheap getaways from CLT
Charlotte to Las Vegas, $104 round-trip on United/Frontier (one-stop/nonstop), Feb. 7-11.
Valentine’s Day brotherly love: Charlotte to Philadelphia, $40 round-trip on Frontier (nonstop), Feb. 13-16.
Charlotte to Newark, $52 round-trip on Spirit (nonstop), Feb. 20-23.
Charlotte to Fort Lauderdale, $64 round-trip on Spirit (nonstop), various dates February-March.
Charlotte to New Orleans, $174 round-trip on American (nonstop), April 10-13.
Charlotte to Montreal, $186 round-trip on United (one-stop), May 16-20.
Source: Google Flights. Fares retrieved Wednesday morning. They might have changed by the time you read this.
Programming note: Ledger editor Tony Mecia appears as a guest on 90.7 WFAE at 6:40 a.m. and 8:40 a.m. on Thursdays for a discussion of the week’s local business news in the station’s “BizWorthy” segment. Audio and transcripts are also available online.
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The Charlotte Ledger is an e-newsletter and web site publishing timely, informative, and interesting local business news and analysis Mondays, Wednesdays, and Fridays, except holidays and as noted. We strive for fairness and accuracy and will correct all known errors. The content reflects the independent editorial judgment of The Charlotte Ledger. Any advertising, paid marketing, or sponsored content will be clearly labeled.
The Charlotte Ledger is published by Tony Mecia, an award-winning former Charlotte Observer business reporter and editor. He lives in Charlotte with his wife and three children.