shadowofmordor

The US-based Federal Trade Commission (FTC) and Warner Bros have reached a settlement with the latter agreeing to provide disclosures when reviewers are paid to promote its products. The FTC had accused Warner Bros of deceiving consumers by failing to disclose that the company had paid reviewers for positive reviews when marketing its 2014 game Middle Earth: Shadow of Mordor. The entire terms of the settlement are unclear.

The FTC does not specifically name reviewers or review website other than popular YouTuber PewDiePie who was allegedly paid “thousands of dollars” for his review of the game. Note that the FTC issues an administrative complaint when it has “reason to believe” (sic) that the law has been or is being violated, and it is proceeding in the public interest. The agency has pretty damning evidence too; Warner Bros required reviewers to ‘promote positive sentiment’ about the game, show viewers how and where to register/buy the game and not show any in-game bugs or glitches.

Additionally, Warner Bros required reviewers to place disclosures in the description box appearing below the video, which, according to the agency, were unlikely to be visible to most customers.  The FTC has pretty specific rules (pdf) with regards to advertising disclosures. Essentially Warner Bros tried to pass off its marketing campaign as legitimate objective reviews of the game, which the FTC rightfully called out.

ASA ruling: Back in 2014, the British Advertising Standards Authority (ASA) told video bloggers (basically YouTube content creators), that they were breaking the law by keeping sponsorship undisclosed. The ASA was hearing a case about Oreo biscuits videos featuring YouTube personalities without being disclosed as adverts, which were subsequently banned.

However, the problem of inadequate disclosures is unlikely to go away soon especially given the high impact (PewDiePie had over 3 million view on Warner’s Middle Earth review) such campaigns can have. Case in point: earlier this month, two prominent YouTuber’s came under fire for a string of videos about a Counter-Strike: Global Offensive gambling site. The videos promoted gambling on the site without disclosing the makers of the videos were the owners of the website themselves.

YouTube’s stand: Interestingly, YouTube has an inbuilt mechanism to notify a product placement, endorsement or other commercial relationships. The platform encourages content creators to follow the local jurisdiction laws of the target audience and mentions that “where your content does include paid product placements or endorsements we don’t want viewers to feel misled and that means being upfront and honest about any commercial relationship that might have influenced or contributed to your content – be that editorially or financially.” While there is little incentive for content creators to follow these guidelines, we expect YouTube itself will find a way to deal with such issues. The video platform has an incentive after all; it will want a slice of all advertising posted on it.

Also read: InMobi fined $950k by the FTC for tracking users without their consent