August 27, 2010
A public relations agency hired by video game developers will settle Federal Trade Commission (FTC) charges that it engaged in deceptive advertising.
Reverb Communications, Inc. was accused of having employees pose as ordinary consumers posting game reviews at the online iTunes store, and not disclosing that the reviews came from paid employees working on behalf of the developers.
"Companies, including public relations firms involved in online marketing, need to abide by long-held principles of truth in advertising," said Mary Engle, Director of the FTC's Division of Advertising Practices. "Advertisers should not pass themselves off as ordinary consumers touting a product, and endorsers should make it clear when they have financial connections to sellers."
Making it right
Under the proposed settlement order, Reverb and its sole owner, Tracie Snitker, are required to remove any previously posted endorsements that misrepresent the authors as independent users or ordinary consumers, and that fail to disclose a connection between Reverb and Snitker and the seller of a product or service.
The agreement also bars Reverb and Snitker from misrepresenting that the user or endorser is an independent, ordinary consumer, and from making endorsement or user claims about a product or service unless they disclose any relevant connections that they have with the seller of the product or service.
Full disclosure lacking
Reverb is a company that provides public relations, marketing, and sales services to developers of video game applications, including mobile gaming apps. Between November 2008 and May 2009, Reverb and Snitker posted reviews about their clients' games at the iTunes store using account names that gave readers the impression the reviews were written by disinterested consumers, according to the FTC complaint.
Reverb and Snitker did not disclose that they were hired to promote the games and that they often received a percentage of the sales. These facts would have been relevant to consumers who were evaluating the endorsement and deciding whether to buy the gaming applications, the FTC complaint contends.
Revised guides
In its revised endorsements and testimonials guides issued last year, the FTC specified that while decisions will be reached on a case-by-case basis, the online post by a person connected to the seller, or someone who receives cash or in-kind payment to review a product or service, should disclose the material connection the reviewer shares with the seller of the product or service. This applies to employees of both the seller and the seller's advertising agency.
