FTC Legitimacy Test

Most all modeling companies are private, not publicly traded, so it is difficult to determine if they are legit. Most of these companies do not offer important financial information on their websites or in their advertising, and too often they are not very forthcoming.

Faced with a lack of information, consumers often wonder if a modeling company is legitimate. They have heard about a modeling agency, a modeling school, a modeling convention, or a modeling website, and they ask, "Is it legit?"

One of the best ways to determine if a modeling company is legitimate is to study the federal government standards of legitimacy. In the past the Federal Trade Commission (FTC) has dealt with modeling companies which were not legitimate, charging them with deceptive and unfair trade.

What are the federal government standards of legitimacy for modeling companies? What is the FTC Legitimacy Test?

Reviewing three cases of FTC action against bogus modeling companies which were charged with Deceptive and Unfair Trade Practices, one basic test is clear. The FTC Legitimacy Test is a test of the company's success rate for return on investment.

In dealing with the Screen Test USA model placement service scam , the FTC said: "The consumers are told that people who buy and complete Screen Test's program have a much higher success rate or are more likely to get agency representation or acting or modeling jobs."¹

"In fact," the FTC complaint said, "parents who buy the talent promotional services from Screen Test U.S.A. and its affiliates "do not have a high rate of success and are not likely to obtain (professional) agency representation, or acting, or modeling jobs."²

In dealing with the Model 1 modeling agency scam (FTC v. Model 1, Inc., et al), the FTC said one of the company's deceptive acts was "promising high-paying assignments"³ yet this claim was not backed up by their performance. They had a low success rate in getting models major modeling jobs. They were charged with "misrepresenting their ability to get lucrative job assignments for consumers as models and actors."⁴ The firm screened potential models saying "the applicant can expect substantial pay as a model or actor, if accepted."⁵ In fact, according to the FTC, consumers who completed the defendants' training program "seldom receive any paid employment."⁶ They had an extremely high failure rate in two respects: the quality and quantity of jobs.

In dealing with the National Talent Associates advance-fee model management scam (FTC v. National Talent Associates, Inc.), the FTC said:

In 1974 the FTC issued a complaint charging National Talent Associates and its officers with misrepresenting their ability to place children as models and entertainers. National Talent signed a consent order in 1975 permanently prohibiting misrepresentations of their ability to obtain modeling positions for their clients, requiring them to disclose specified information and providing customers with a three-day cooling-off period. In 1979 the Commission charged National Talent Associates and its officers violated the 1975 order by misrepresenting the placement and employment figures and gross annual earnings of their clients.⁷

What information did the FTC settlement with NTA require NTA to disclose? Their success rate. Pure and simple. NTA was required to inform consumers in advance of upfront fee payments how many children they placed in acting or modeling jobs, and how much they earned as a result of these jobs, basically provide the type of information needed to make an informed decision.

In 1994, Jerome P. Ashfield, the leader of NTA, confirmed as "accurate" the following statistics for a five-year period for clients who paid him hundreds of dollars in advance fees: number of clients: 23,310; number of clients receiving paying work: 629; number of clients receiving paying work over $500: 201.⁸

In 1999, NTA declared their success rate in print before consumers were allowed to pay them:

Only 3.93% of those who paid NTA were paid by NTA! A miniscule fraction ever saw their money again. The scam company had particularly misrepresented two things: one, the chances of a child model who signed up and made payments getting paid work; and, two, the chances of the child models who did get work earning a large income.

Essentially the FTC said it was deceptive of NTA to state or imply children would receive paying work or high-income work when very few did, and it was unfair of NTA to avoid disclosing their extreme failure rate to consumers before payment.

Ultimately the FTC held a logical position: consumers have a right to know their chances of getting a return on their investment. What could be more simple or more important? The only fair and honest way to communicate this information is by providing statistics over several years for the number of models who received work through the company and the number who earned as much or more than they paid upfront.

The most common false claims made by modeling companies are basic: 1) you will get work as a model, 2) you will earn a lot of money. The credibility test to investigate these claims has to be based on history, which is to say, the FTC Legitimacy Test.

The litmus test applies today. You follow the money. You look at the bottom line. "Show me the money!" That is the test of legitimacy. Thus the questions to ask a modeling company before getting involved, especially if money is involved, are basic:

1. How many models do you represent?
2. How many models whom you represent have received paying work?
3. How many models whom you represent who have received paying work earned more than they paid?

The FTC Legitimacy Test applies to all kinds of modeling companies from modeling agencies to model managers to modeling conventions to modeling websites to modeling magazines and casting databases. Basically everything.

The only way to project potential success and potential earnings and avoid wasting time and money is to look at the past. Does it work? For how many people?

The issue and the test is not whether it works for one person or a few people or even a handful of people or any number. NTA did have some success. But in the context of the larger picture, that is, the full picture, it was virtually meaningless. You need to get the full story. The FTC did not dispute NTA had some success stories -- that was not the issue -- the issue was the percentage of success stories. The fact that NTA did have some success stories, even a few (okay, three) who earned over $10,000, neither stopped the FTC from taking action, nor the judge from ruling NTA had to pay back tens of thousands of dollars. The court ordered the defendants to pay a $160,000 civil penalty.⁹

If parents had signed up their kids with NTA under the impression they could earn a lot of money, they may have thought they would earn at least $5,000. But over a period of five years, only seven children out of 18,414 earned more than $5,000 through NTA.

Some offices of the Better Business Bureau (BBB), to their credit, confront modeling agencies and modeling companies about their success to determine legitimacy. For example, BBB NY confronted Tomorrow Talent:

The Bureau wrote this firm a letter requesting copies of its contract promotional materials, refund policy, and proof that clients are obtaining bona fide work and earning money. The firm has failed to provide the requested information.¹⁰

BBB NY also confronted Model Search America (before it went out of business):

In August 2003, the BBB requested that this firm substantiate its advertising claims regarding the services promised in its promotional materials and on its web site. The Bureau requested that the firm provide the names of 10 customers who utilized the firm's services within the past year, as well as the names of 10 companies, with specific contracts, who hired models/talent through this firm. The firm has failed to respond to the BBB's request.¹¹

The BBB of Mississippi suggests that perhaps the quickest way to weed out the unreliable agencies is to ask for proof of its success:

A reputable model/talent agency will be more than willing to provide you with the names, addresses and phone number of models and actors who have recently secured successful work based on the company's training/efforts. And, a reputable agency will provide contact information for companies that have supposedly hired models and actors trained by them. Use that information to research the agency yourself and determine whether you can expect a similarly successful experience.¹²

Following the BBB's lead and finding out if a modeling agency (especially a new one) or a model search firm has landed anyone any work, is a good start, and it is good as far as it goes, but it does not go far enough. It is not enough to know the truth: you also need to know the whole truth. It is not sufficient to know that a modeling agency has a success story: you must know its success rate. And you should go still further, looking not only at how many models received work through a modeling agency or model search, if "any work" is defined as a "success," but the income from that work, because not all modeling jobs are of equal value.

As the statistics for NTA above illustrate, there were far more low-paying modeling jobs available than high-income modeling jobs. It is wrong to assume most modeling jobs pay extremely well. Forget what you have heard, discard the few great success stories; look at the numbers: they are a reality check. In the case of work for children, for example, the vast majority (556/723) of those who made any money at all, earned less than $500, and only a few (3/723) earned over $10,000.

On its face, if a modeling agency said, "We got 556 models modeling jobs," you might be impressed. If they said they all earned less than $500, you might be less impressed. Then if they told you those 556 were out of 18,414, you might well be less than impressed.

What is your definition of success? Earning more than you invested?

The president of a national modeling agency was confronted by the FTC Legitimacy Test. He boasted thousands of jobs being awarded to young models across America. He proclaimed over a million dollars paid out to models in one year alone. Then, to cut to the chase, he was asked the $64,000 Question: How many models whom you represent who have received paying work through your agency earned more than they paid?

The question was asked because his firm sells photography and comp cards and seminars and so-called internet "exposure" for a grand total of over $1,000 before the models get their first audition. The conversation came to an abrupt halt. No answer. He was asked the bottom line questions several more times over several weeks and he still would not answer. It was well known that the type of work his agency found models paid low rates and it was long suspected most of the models did not recoup their investment.

The Attorney General of North Carolina took action against the Face National Models and Talent photo mill scam. In the Complaint he said:

In their advertising and during the sales presentations at the introductory sessions, defendants lead consumers to believe that defendants find traditional modeling jobs in print and runway work for their clients at salaries in excess of $150 per hour. Upon information and belief, the jobs defendants actually find for Face customers are promotional jobs. The majority of these promotional jobs include handing out product samples at concerts and trade shows, earning the models no more than $15 per hour from which Face also deducts its commission. At that rate, a model would have to work about sixty-six (66) hours to recoup the almost $1,000 he or she paid Face for the photography session and the comp cards. Upon information and belief, few, if any, Face customers have worked enough hours to recoup the initial investment for photography and comp cards.¹³

 

While Face tells consumers during the sales presentation that some of their jobs are promotional modeling jobs, Face misleads the consumers as to the nature of these jobs by withholding the details of those promotional jobs. Most Face customers, at the time they pay Face to take pictures and produce comp cards, do not realize that the promotional work pays less than $15 per hour and that Face will not place them in enough jobs to recoup all of the money they pay Face for the photography shoot and comp cards.¹⁴

This is one basic clear example of how important it is to look beyond the fundamental issue of whether a modeling agency gets models work, or the agency gets thousands of jobs; that just does not tell the full story. So what if an agency gets thousands of models jobs each year? If they represent thousands of models or the payoff is so low per "modeling" job, the bottom line is no return on investment for the vast majority of models, and, more than likely, losses. Just do the math.

Elisabeth Smith, founder and owner of the Elisabeth Smith Model Agency, and a child model agent since 1960, wrote: "The best advice I can give is to check out an agency before going for an interview, and during the interview ask who their major clients are and what their success rate is in placing children in jobs."¹⁵

If you only look at a few success stories and don't step back to see how many there are, you may not see the forest from the trees, and end up making a decision based on insufficient information that costs you dearly, and end up having to go to the FTC, a class action law firm, or small claims court to recover your money.

Make no assumptions about the quantity of work or the quality of work a modeling agency gets models. Put it to the FTC Legitimacy Test.

1. "Bogus 'Talent Scouts' Use Smoke Screen To 'Screen Test' Consumers," Federal Trade Commission, Press Release, May 27, 1999. .

2. "Children's Talent Agency Charged With Deceptive Trade Practices," Attorney General Bob Butterworth News Release, May 27, 1999.

3. "LIGHTS! CAMERA! ACTION! -- SCAM? IF YOU'VE GOT "the Look" . . . LOOK OUT!", Federal Trade Commission, Press Release, May 28, 1999

4. Ibid.

5. Ibid.

6. Ibid.

7. "National Talent Associates Inc.," Federal Trade Commission, Press Release, October 2, 1985.

8. "Not All Talent Scouts Behave Like Model Citizens," Vivian Marino, Los Angeles Times, October 26, 1994, p. 9.

9. "FTC Wins Permanent Injunction Against Talent Broker," Federal Trade Commission, Press Release, May 27, 1999.

10. BBB Reliability Report for Tomorrow Talent, (http://www.bbbnewyork.org/businessreports/Default.aspx?id=34786) [June 2, 2004].

11. BBB Reliability Report for Model Search America, (http://www.bbbnewyork.org/businessreports/Default.aspx?id=35940) [June 2, 2004].

12. Bill Moak, "BBB Issues Nationwide Alert on Fraudulent Modeling Agency Offers," Dec. 11, 2002. (http://www.bbbmississippi.org/newsrelease757a.html?newsid=38&newstype=1)

13. North Carolina v. Face National Models and Talent LLC, ¶21.

14. Ibid., ¶25.

15. Elisabeth Smith, Your Child As A Model (Stretham: Hollen Street Press, 1989), 32.