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Lack of Disclosure Strikes Video Games as Warner Bros. Settles with the FTC

FTC-logoI’ve written pretty extensively about the need for proper disclosure and transparency in the world of geek blogging. Transparency is one of the things this site was founded on and it’s something I take seriously. We probably over disclose in the other end. But, better to be honest and forthcoming than be caught later on. There are pretty clear guidelines the Federal Trade Commission (FTC) has laid out as to what blogs/online personalities need to disclose when receiving goods or payments for endorsements, testimonials, and reviews.

It was announced Monday that the FTC has settled with Warner Bros. Home Entertainment over their promotion for the video game Middle Earth: Shadow of Mordor. hey failed to adequately disclose that the company paid influencers. This added up to thousands of dollars to post positive gameplay videos on YouTube and other social media. The game has a score in the mid 80s on Metacritic. The game was released in 2014 and altogether the promotion was viewed about 5.5 million times.

Shadow_of_Mordor_cover_artWarner Bros. through Plaid Social Labs hired the “online influencers” to create gameplay video and post it on YouTube as well as promote it on Twitter and Facebook. Named in the announcement was YouTube personality PewDiePie. It should be noted that his video currently says “this video was sponsored by Warner Brother” in the info section but was not verbally said in the video I watched. However, that specific set-up is specifically mentioned in the FTC’s release. The disclosure was hard to find, if present at all, for the videos on YouTube, Facebook, or elsewhere. Some reviewers only disclosed they received early access and in at least one instance Warner Bros. approved the video itself.

Warner Bros. paid anywhere from hundreds to tens of thousands of dollars on top of a free advance release copy of the game and told influencers to promote it. They then used those paid promotions to further promote their game without disclosing they were indeed paid promotion.

Warner Bros. is now barred from failing to make sure disclosures in the future and can’t “misrepresent that sponsored content.” They must also educate influencers about sponsorship disclosures, monitor sponsored influencers for compliance, and if need be terminate or withhold payment for non-compliance.

The decision by the FTC is open for public comment for 30 days, through August 10, 2016. At that time the Commission will decide whether to make the proposed consent order final. Those who want to submit comments can do so here.

This is the second time within a year that video games have caught the eye of the FTC. Last year Machinima was busted for similar issues and not disclosing payments to promote the Xbox One.

Around the Tubes

Days are counting down until a new year, but we still have one more new comic book day! We have our picks in a few hours, but are there any you’re excited for?

While you await for that, here’s some news from around the web to keep you entertained.

Around the Tubes

CBLDF – 10 Comics CBLDF Defended in 2015 – Go support them!

Advocate – Steve Orlando Isn’t Waiting for Gay Heroes, He’s Creating Them – And you should read what he’s doing!

GamePolitics – FTC Closes 2015 With No New Secret Shopper Report – Maybe because everyone realized they were doing a good job?

 

Around the Tubes

CBR – Chew #53

CBR – Daredevil #2

Talking Comics – King Conan: Wolves Beyond the Border #1

Talking Comics – Rocketeer at War #1

BlogCritics – Zombillenium: Control Freaks

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)

FTC Takes on Crowdfunding Fraud

FTC-logoWith Kickstarter and other crowdfunding platforms unwilling to take responsibility and do something about fraud and failed projects, the Federal Trade Commission has stepped in to do so.

While it’s a slap on the wrist, the FTC has announced through press release that it settled with Erik Chevalier over a failed board game Kickstarter project. Chevalier, as Forking Path Co., had his project The Doom That Came To Atlantic City! successfully funded in June 2012. The fundraising campaign raised $122,874 from 1,246 people, and the project was announced dead by Chevalier 14 months after in an update on the page.

The FTC charged Chevalier with not delivering his promised rewards or refund the backers. Instead, Chevalier spent most of the money on “unrelated personal expenses such as rent, moving himself to Oregon, personal equipment, and licenses for a different project.”

photo-originalAs part of his settlement Chevalier can not make future misrepresentations about any crowdfunding campaigns. He also can not use any of the donor’s personal information in any way and must get rid of it. The final order also imposed a $111,793.71 judgment but that has been suspended due to Chevalier’s inability to pay. He’ll have to pay if it turns out his financial situation isn’t what he claimed. He’ll also have to report any crowdfunding activity he partakes for the next 18 months. So lots of slaps on the wrists and some bad press for Chevalier. Chevalier in the end never admitted or denied the charges. How that amount of fraud doesn’t qualify as grand larceny and involve jail time baffles my mind.
Now, if only the FTC would do something about crowdfunding platforms profiting off of the fraud. The FTC was asking if the platforms have any responsibility, to which the FTC attorneys responded that “crowdfunding platforms have a responsibility to act fairly and non-deceptively.” In other words as long as they say upfront you can get screwed, the platforms can profit off of fraud as long as they want.

While they were promised a lot, backers who pledged to get the game did eventually do so. Cryptozoic Entertainment stepped in to help with the production of the game. Even after the files were lost, they were recreated by Lee Moyer, one of the game’s creators. Cryptozoic tracked down sculpts and molds with help of Z-Man Games founder Zev Shlasinger. They eventually shipped 1200 Kickstarter backers a copy of the completed game. Cryptozoic paid for the production, but the company and creators didn’t receive any revenues from the backers. The backers didn’t get the promised extras like pewter miniatures, art prints, t-shirts and other promised items.

The FTC took on the case as part of their work to protect consumers when it comes to new and emerging financial technology also known as FinTech. The case was filed in the U.S. District Court for the District of Oregon, Portland Division.

Almost American