Machinima Settles With the FTC for Deceptive Videos

Machinima_LogoWe’ve written in the past how sites, such as ours, should be disclosing payments and products received for free in our coverage (we do). YouTube network Machinima has been busted, and paid a fine, for not disclosing payments received for positive coverage of the Xbox One. Part of their deal with Microsoft was not to talk about fight club disclose the payments.

That’s pretty sketchy.

The Federal Trade Commission has rules about this. We discuss those in the link above. The FTC launched an investigation into the deal and Machinima’s “deceptive advertising.” The FTC announced today that there has been a settlement.

Writes the FTC:

Under the proposed settlement, Machinima is prohibited from similar deceptive conduct in the future, and the company is required to ensure its influencers clearly disclose when they have been compensated in exchange for their endorsements.

More from the FTC release:

Respondent paid influencer Adam Dahlberg $15,000 for the two video reviews that he uploaded to his YouTube channel “SkyVSGaming.” In his videos, Dahlberg speaks favorably of Microsoft, Xbox One, and Ryse. Dahlberg’s videos appear to be independently produced and give the impression that they reflect his personal views. Nowhere in the videos or in the videos’ descriptions did Dahlberg disclose that Respondent paid him to create and upload them. Dahlberg’s first video received more than 360,000 views, and his second video more than 250,000 views.

Respondent paid influencer Tom Cassell $30,000 for the two video reviews that he uploaded to his YouTube channel “TheSyndicateProject.” In his videos, Cassell speaks favorably of Microsoft, Xbox One, and Ryse. Cassell’s videos appear to be independently produced and give the impression that they reflect his personal views. Nowhere in the videos or in the videos’ descriptions did Cassell disclose that Respondent paid him to create and upload them. Cassell’s first video received more than 730,000 views, and his second video more than 300,000 views.

$30,000!? How do we get some of this cash?

Microsoft didn’t directly cut the deals, their ad agency Starcom did. In the marketing campaign the company recruited YouTube personalities to make specific types of videos about the new Xbox system, and all of them were positive.

That phase one.

Phase two had more people involved and paid based on their traffic. 300 videos were made in the end adding up to over 300 million views.

You can get paid for this stuff!? You also just get a slap on the wrist if caught? Machinima could have been on the hook for $16,000 in fines, netting them a nice profit for the scheme. They won’t have to pay anything.

We just get free stuff (and disclose everything). Knowing this, how does this change your opinion of sites such as ours?

(via Kotaku and Wired)