Federal Trade Commission settles with Xbox One promoter for deceiving consumers
A California-based online entertainment network, Machinima, received a telling off from the Federal Trade Commission (FTC) after it engaged in deceptive advertising in late 2013.
Machinima paid “influencers” to post videos on YouTube that endorsed Microsoft’s Xbox One gaming console and several games. The influencers did not disclose that they received compensation for their videos and led viewers to believe that the reviews were objective.
“When people see a product touted online, they have a right to know whether they’re looking at an authentic opinion or a paid marketing pitch. That’s true whether the endorsement appears in a video or any other media,” said Director of the Bureau of Consumer Protection, Jessica Rich.
According to the FTC, Machinima paid two of these endorsers $15 000 (R200 000) and $30 000 (R400 000) for their efforts that reached 250 000 and 730 000 viewers respectively.
The settlement states that Machinima is prohibited from any advertising of a similar deceptive nature in the future. They would have to make it clear when influencers are being compensated for with their reviews and videos. A violation of the settlement in future would incur a fine of $16 000 (R216 000).
The payment came from a deal between Machinima and StarCom MediaVest Group, Inc., who acted on behalf of Microsoft. A tallied 300 videos were uploaded by influencers, which brought in 300 million views, each endorsing Microsoft while feigning objectivity.
The FTC has sent a letter to Microsoft and Starcom concerning their involvement in this case.
“While Microsoft and Starcom both were responsible for the influencers’ failure to disclose their material connection to the companies occurred in spite of, and not in the absence of, policies and procedures designed to prevent such lapses,” said the FTC.
In an email statement seen by WIRED, Microsoft reportedly said: “We are pleased that the FTC recognized Microsoft has vigorous compliance procedures for sponsored campaigns.”
