The disclosure that author James Frey lied in his best-selling book, A Million Little Pieces, and the furor that followed raise numerous questions about truth in advertising, trust between sellers and buyers, brand image and reputation, as well as two themes that Frey himself focused on in his now-discredited memoir of recovery from substance abuse — suffering and redemption.

Television host Oprah Winfrey did a commendable job redeeming herself and repairing her damaged personal brand by apologizing to her audience for continuing to endorse the book after it was learned that it contained fabrications, according to Wharton faculty members who specialize in marketing, trust and ethics. Although Frey suffered when Winfrey used her TV show to scold him for embarrassing her by writing a book laden with falsehoods, he came off ill-prepared and less than forthcoming. He has tried to salvage his reputation by offering a written explanation for his actions, which his publisher is now distributing with new copies of his book. In the author’s note Frey acknowledges that he “embellished many details about my past experiences” and that he wanted to create “the tension that all great stories require.” But Frey’s statement may be too little, too late. It remains uncertain whether he has fully redeemed himself and whether many readers will buy future non-fiction books written by him, the Wharton experts say.

Frey’s publisher, Doubleday, and Winfrey are not entirely out of the woods yet, either. Each must take additional steps if they wish to restore entirely the trust that existed between them and readers before “The Smoking Gun” website posted an article on January 8 that debunked many of the statements made in Frey’s book. Several Wharton faculty members suggest that Oprah, Doubleday and other publishers wishing to avoid Doubleday’s fate establish fact-checking procedures or take other measures to ensure that claims made by memoirists are valid prior to marketing or endorsing such books in the future.

Maurice E. Schweitzer, professor of operations and information management, says there is simply no question that writers of memoirs must stick to the facts because that is what readers expect. To do otherwise risks an erosion of trust between buyers and sellers similar to what happened after the reporting scandals at the New York Times (Jayson Blair in 2003) and the Washington Post (Janet Cooke in 1980) as well as any number of similar controversies over the last 30 years. These include article fabrications in the 1990s by Stephen Glass, a writer for The New Republic magazine; Alex Haley’s admission that he fictionalized parts of his 1970s bestseller Roots; a phony biography of billionaire recluse Howard Hughes by Clifford Irving in the 1970s that landed Irving in jail; controversy over “historical” films by director Oliver Stone; and the recent disclosure that Hwang Woo-suk, a Korean scientist, had completely fabricated data in a research paper on stem cells.

“People want to read The New York Times because they want to get an accurate representation of what’s going on around them,” says Schweitzer, who has written about trust and unethical behavior. “People want to read memoirs because they seek guidance about what an individual can or can’t do, and they want to be inspired by that. There are clear benefits if something is true.”

In Schweitzer’s view, Winfrey made two mistakes. First, she endorsed A Million Little Pieces to members of Oprah’s Book Club in 2005 without checking its veracity. She later made a bigger error in defending her choice of the book in a telephone call to “Larry King Live” following “The Smoking Gun” revelations. Winfrey told King that the controversy was “much ado about nothing” because “the underlying message of redemption in James Frey’s memoir still resonates with me, and I know it resonates with millions of other people who have read this book.”

But Schweitzer says Winfrey made a “fantastic” recovery from these missteps on a subsequent program, aired January 26, 2006, on which Frey and his publisher, Nan A. Talese, appeared. Winfrey apologized to viewers and posed hard-hitting questions to Frey and Talese about the whole affair. Frey admitted to extensive fabrications.

“If you could write a script for trying to recover from those mistakes, she followed it,” says Schweitzer. Frey, however, “gets no marks for being forthcoming. At no point in this process did he initiate an apology. It seemed the very point at which he recanted he was prompted by somebody else. He didn’t take the initiative in promoting the truth. He comes off looking like a very untrustworthy person. I don’t see how he can recover from that.”

According to marketing professor Barbara Kahn, the controversy represented a “branding crisis” for Winfrey. Winfrey “violated the trust with her audience by saying the truth didn’t matter when she called the Larry King show. It was a violation of a contract she had with her audience. If you think of the brand ‘Oprah,’ the reason people put trust in it is she has the resources to ensure something is true. That was violated.”

Kahn adds that Winfrey had more to lose than Frey as a result of the controversy, in part because he had already reaped a fortune from the book’s sales of some two million copies. Says Kahn: “She is a brand name. She made a guarantee [by initially endorsing the book] and her reputation was more at stake. The cost was greater to her than to him.”

The Right Way to Frame the Issue

Katherine A. Nelson, a Philadelphia-area ethics consultant who teaches in Wharton Executive Education programs, believes that Winfrey was not at fault for taking an author’s word about the truth of his book because the publisher ostensibly had already done so. However, after doubts had been raised, Winfrey “should not have called Larry King without doing some fact-checking of her own. But once she learned more about Frey and the ‘facts’ of the book, she did the right thing and made lemonade out of the lemons she was handed by Frey. And she was right to give him a few lemons of her own when she confronted him on her show.”

Wharton ethics professor Thomas W. Dunfee says Winfrey’s mistake in phoning Larry King was similar to errors made by managers in many businesses: She did not see an ethical problem because she did not “frame” the issue in the right way. As a result, she missed seeing the larger issue and its risks.

“The way in which a question is framed often makes all the difference,” notes Dunfee. “Until there was an uproar, Oprah didn’t understand that there was a broader issue involved. She was not framing the issue in the context of what this might mean in terms of the integrity of the publishing industry and the impact of her endorsing a book that was different from what it was claimed to be. Originally, she said, ‘Well, even though the book wasn’t literally true, the story meant something to readers and helped them in coping with their own lives. That’s good and that’s sufficient.’ I don’t think she was thinking, ‘My duty is to my readers,’ until the issue got a larger frame after all the hullabaloo about publishing and journalism.”

For Dunfee, the takeaway lesson of the Frey-Winfrey debacle is, “Be careful before you make public statements to be sure you are framing the issue as broadly and appropriately as possible. Sometimes businesses tend to focus solely on their own contexts. They fail to understand there is going to be a broader public concern. The issue of executive compensation is an example. There are general public concerns about the distribution of wealth. It’s shortsighted for companies to frame the issue of executive compensation as merely a bargaining issue in a free-market context.”

Schweitzer suggests that Doubleday (along with other publishers) and Winfrey can do more to salvage their reputations and reestablish trust with their customers by fact-checking future memoirs before publishing and endorsing them. They should “make it very clear, and broadcast it both internally and externally, that ‘whenever we claim [a book] is a truthful product, we are going to put our stamp on it, but not until we are satisfied that a memoir is a memoir.'”

Schweitzer acknowledges that it would be unrealistic and prohibitively expensive to confirm every fact but that Winfrey and publishers could spot-check some facts to ensure veracity. Nelson, however, says expecting publishers to check more than a handful of facts in memoirs — and other nonfiction books — is too onerous. She suggests an alternative. “There are too many facts in too many manuscripts for publishers to ever do more than a very cursory job of it. What if the media had to fact-check every statement made by guest commentators? Should we go after NBC if someone lies on ‘The Today Show?’ Should we go after Wal-Mart if a manufacturer lies about the efficacy of a headache remedy that Wal-Mart sells? Where does it end? At some point, distributors have to trust manufacturers.”

That said, Nelson adds that publishers have some responsibility to try to get at the truth. Publishers “could ask authors to sign a statement certifying the veracity of materials submitted for publication. And if they are going to pour millions of dollars into marketing a high-profile book like Bill Clinton’s autobiography or the Frey book, they had better be really clear about the importance of truth with the author up front. When they are negotiating the contract, they should ask for a certification of veracity and then randomly check a few of the more important facts in the book before it goes to press.”

Pushing the Envelope in Ads

The Frey-Winfrey affair raises larger, more elusive, questions about the cynicism consumers feel toward advertisements and how consumers perceive truth.

According to marketing professor David Schmittlein, the Frey-Winfrey debacle is the most recent example of how deception in a media- and advertising-saturated world can have unintended consequences. The legal standard to enforce truth-in-advertising laws is hard to apply in the world of publishing, unlike other business sectors, because it is virtually impossible for publishers to win lawsuits alleging that their sales were damaged by lies an author told in a book or article published by a competitor.

Here’s how Schmittlein explains it: Marketers are inclined to go as far as they can in pushing the envelope of truth in advertising, but they bump up against two boundaries when they do so. The first boundary is legal. For an advertisement to be judged false and misleading by a court, the ad must be deemed to be misleading as perceived by a reasonable consumer. The ad also must be misperceived in a “material respect” — that is, a claim about a product that would likely matter to a consumer purchasing the product must be misperceived. If aspects of advertising are false but are unlikely to be relevant to a customer in making a purchase decision, no law is broken. Put simply, no harm no foul.

Historically under U.S. law, ads are allowed to exaggerate a product’s properties but they cannot claim a property the product does not have, according to Schmittlein. Of course, the devil is in the details in drawing that distinction. In the case of Frey’s book, at what point does legitimate artistic or journalistic license become questionable embellishment, and then become a lie, thereby causing a reader — who wants to buy a book containing only truths — to be misled in a material respect?

“There is a fair amount of self-policing of false advertising,” Schmittlein notes. “For many years, the main discipline on truth in advertising has not been the government but other marketers. Marketers sue each other over false claims in advertising. But in this case, who’s going to sue Frey saying that sales of his book took away sales that otherwise would have gone to another book? Where there isn’t a competitor who could bring a claim of damages, advertisers get away with more because competitive litigation becomes the thing that draws and enforces the legal boundary.”

The second boundary publishers — or any company — worry about in pushing marketing campaigns to the limit is the more amorphous point at which consumers walk away from the advertising in disgust, complaining that all ads are untrustworthy. Ironically, consumers’ very cynicism about advertising would make it harder for them to prove legally that they were materially misled by an ad.

“Consumers would like to have confidence that ads tell the truth, the whole truth and nothing but the truth the whole time, but consumers have built in an element of cynicism and skepticism about the claims of advertising,” says Schmittlein. “That cynicism and skepticism over the last 40 years has, in turn, moved the needle on the legal boundary. As I noted, the legal boundary relates to misperceptions held by consumers that are material. If people say an ad is probably not true … then it would be difficult under the law to bring a claim of deceptive advertising: The ad isn’t actually deceptive unless it can be proven that people have been misled. If they are not misled, they haven’t been deceived. We usually tend to think of legal standards as immutable. But in the case of deceptive advertising, it’s not true.”

The “Truth Effect”

Marketing professor Lisa Bolton agrees with Dunfee that all marketers should be truthful, not only because it is the right thing to do, but because being deceptive can alter consumers’ long-term psychological perceptions about what is and is not true.

Bolton cites what researchers call the “truth effect” — a tendency for people to believe in the truth of claims if those claims are repeated. There are two explanations for why the effect occurs. First, repeating a claim makes it seem more familiar and people mistake familiarity for truth. The idea is that we tend to think that things we know are truths, not lies, so if something seems familiar then it must be true. Second, people misattribute repeated claims to different sources, and then tend to believe something more if multiple sources endorse the claim.

“It turns out that it is very difficult to de-bias the truth effect,” Bolton says. “For example, the more you tell people that a claim is false, the more they believe it is false if you ‘test’ them right away. But warning people can backfire over time because they can later forget that they were told the statement was false — and then it seems familiar and they are more likely to think it’s true.”

Bolton says the power of the truth effect is such that “it really puts a strong onus on the marketer, or the media, to ensure that communications are truthful because, if they aren’t, how can the damage be ‘undone’ later? That is why, even if people say that they don’t expect marketing claims to be truthful, it’s still damaging if they aren’t.  Maybe people can encode and remember in the short term that the marketing is or might be hyperbole or deceptive, but in the long run they may forget that qualification and believe the original claim.”