Warner Bros. Agrees to Settle Deceptive Marketing Charges

Warner Bros. Home Entertainment, Inc. has settled Federal Trade Commission charges that it deceived consumers during a marketing campaign for the video game Middle Earth: Shadow of Mordor, by failing to adequately disclose that it paid online “influencers” to post positive gameplay videos on YouTube and social media.

Under a proposed FTC order, Warner Bros. is barred from failing to make such disclosures in the future and cannot misrepresent that sponsored content, including gameplay videos, are the objective, independent opinions of video game enthusiasts or influencers.

“Consumers have the right to know if reviewers are providing their own opinions or paid sales pitches,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Companies like Warner Brothers need to be straight with consumers in their online ad campaigns.”

According to the complaint, during a marketing campaign designed to generate interest within the gaming community, Warner Bros. hired online influencers to develop sponsored gameplay videos and post them on YouTube. Warner Bros. also purportedly told the influencers to promote the videos on Twitter and Facebook, generating millions of views.

The FTC alleges that Warner Bros. paid each influencer from hundreds to tens of thousands of dollars, gave them a free advance-release version of the game, and told them how to promote it. The FTC contends that Warner Bros. required the influencers to promote the game in a positive way and not to disclose any bugs or glitches they found.

While the videos were sponsored content, the Commission alleges that Warner Bros. failed to require the paid influencers to adequately disclose this fact. The FTC also alleges that Warner Bros. did not instruct the influencers to include sponsorship disclosures clearly and conspicuously in the video itself where consumers were likely to see or hear them.

Instead, according to the complaint, Warner Bros. instructed influencers to place the disclosures in the description box appearing below the video. Because Warner Bros. also required other information to be placed in that box, the vast majority of sponsorship disclosures appeared “below the fold,” visible only if consumers clicked on the “Show More” button in the description box. In addition, when influencers posted YouTube videos on Facebook or Twitter, the posting did not include the “Show More” button, making it even less likely that consumers would see the sponsorship disclosures.

The FTC also alleges that the Warner Bros.’ contracts with influencers subjected their videos to pre-approval, and that on at least one occasion Warner Bros. reviewed and approved an influencer video that lacked adequate sponsorship disclosure.

The Commission’s complaint charges that Warner Bros., through its marketing campaign, misled consumers by suggesting that the gameplay videos reflected the independent or objective views of the influencers. The complaint also alleges that Warner Bros. failed to adequately disclose that the gamers were compensated for their positive reviews.

The proposed order settling the FTC’s charges prohibits Warner Bros. from misrepresenting that any gameplay videos disseminated as part of a marketing campaign are independent opinions or the experiences of impartial video game enthusiasts. It also requires the company to clearly and conspicuously disclose any material connection between Warner Bros. and any influencer or endorser promoting its products.

The order specifies the minimum steps that Warner Bros., or any entity it hires to conduct an influencer campaign, must take to ensure that future campaigns comply with the terms of the order. These steps include educating influencers regarding sponsorship disclosures, monitoring sponsored influencer videos for compliance, and, under certain circumstances, terminating or withholding payment from influencers or ad agencies for non-compliance.

Regulatory scrutiny continues to increase with respect to advertising disclosures and whether they adequately prevent ads from being deceptive. Please contact the author if you are interested in discussing the design and implementation of preventative compliance controls that effectively ensure consumers notice and understand disclosures, and can use them in their decision-making process.

Information conveyed in this article does not purport to cover every issue associated with online advertising disclosures. This article is provided for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. No person should act or rely on any information in this article without seeking the advice of an attorney.

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