In Sept. 2015, the FTC brought charges against an online entertainment company that produces content relating to video games and gaming culture for engaging in deceptive advertising by paying influencers to post YouTube videos endorsing Microsoft’s Xbox One System and several games. The influencers failed to adequately disclose that they had been paid by Machinima for their seemingly objective opinions.
The final consent order, which can be viewed here, prohibits Machinima from misrepresenting that an endorser is an independent user of the product being promoted. It also requires Machinima to ensure that all of its “influencers” are aware of their responsibility to make the required disclosures. Under the consent order, Machinima must monitor its “influencers’” representations and disclosures, and is prohibited from compensating influencers who fail to make the proper disclosures or who make misrepresentations.
Take-Away: As brands continue to adapt to advertising on social media sites, they need to be sure where it is not clear to a reasonable consumer that the content is a paid advertisement, any seemingly objective content fully discloses if and when the author of the content is paid for the content.