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From Antitrust Law Daily, July 11, 2016

Warner Bros. settles FTC charges over failure to adequately disclose paid online influencers

By Michael Menzhuber, J.D., LL.M.

Warner Bros. Home Entertainment, Inc. has settled FTC charges that, during a video game marketing campaign, it deceived consumers by failing to adequately disclose that it paid online influencers to post positive gameplay videos on YouTube and social media, the agency announced today (In the Matter of Warner Bros. Home Entertainment, Inc., FTC File No. 152 3034).

The FTC’s complaint stems from a late-2014 Warner Bros. online marketing campaign designed to generate buzz within the gaming community for the new release of its video game "Middle Earth: Shadow of Mordor." According to the complaint, Warner Bros., through its advertising agency Plain Social Labs, LLC, hired online influencers to:

  • develop sponsored gameplay videos;
  • post the videos on YouTube;
  • promote the videos on Twitter and Facebook; and
  • promote the game in a positive way and not disclose any bugs or glitches that they found.

The complaint further alleged that Warner Bros. did not require the influencers to disclose the fact that they had been paid to promote the video game. They also did not require the influencers to clearly and conspicuously include sponsorship disclosures in the video itself, where consumers were likely to see or hear them.

Under the proposed FTC consent order, Warner Bros. is prohibited from misrepresenting that any gameplay videos disseminated as part of a marketing campaign are independent opinions or the experiences of impartial video game enthusiasts; and required to clearly and conspicuously disclose any material connection between it and any influencer or endorser promoting its products.

The order also specifies the minimum steps that Warner Bros., or any entity that it hires to conduct an influencer campaign, must take to ensure that future campaigns comply with the terms of the order.

The action against Warner Bros. follows an agency settlement in September 2015 with Machinima, Inc., a California-based online entertainment network. Machinima settled allegations that it failed to disclosure that the "influencers" who posted YouTube videos endorsing Microsoft’s Xbox One system and several games were being paid for their seemingly objective opinions. At the same time, the FTC staff also sent a letter to Microsoft and Starcom closing its investigation into the two companies in the case.

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