Last month the Federal Trade Commission (FTC) reached a settlement with Warner Bros over a complaint that the company paid online influencers to promote 2014 game Shadow of Mordor. While such a practice isn't illegal, the problem was that many reviewers failed to disclose that it was sponsored content. Now, the FTC has told Bloomberg that it plans to crack down on similar posts.
"We've been interested in deceptive endorsements for decades and this is a new way in which they are appearing," said FTC Ad Practices Division Deputy Michael Ostheimer "We believe consumers put stock in endorsements and we want to make sure they are not being deceived."
Rather than explicitly declaring they've been paid for their services, many celebrities and influencers merely put hashtags such as #ad, #sp, or #spon in a video's description or beneath a post, something the FTC says isn't always enough to make people aware they're watching what is essentially an ad.
"If consumers don't read the words, then there is no effective disclosure," Ostheimer said. "If you have seven other hashtags at the end of a tweet and it's mixed up with all these other things, it's easy for consumers to skip over that. The real test is, did consumers read it and comprehend it?"
Ostheimer indicated that the FTC will be going after the companies who are paying for their products to be advertised, rather than those in front of the cameras, though it hasn't ruled out charging a celebrity or influencer for deceptive advertising.
"We hope by bringing these cases that we not only stop the marketer and influencer who didn't have adequate disclosures previously, but also get the message out that other companies should have clear and conspicuous disclosures," he said.
The FTC going after these kind of posts is commendable; providing it hits repeat offenders with a punishment that dissuades them from doing it again. Warner Bros escaped with nothing more than a slap on the wrist for its actions - the FTC merely ordered the company to make sure that influencers understand they must clearly disclose when payments have been made in the future.
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