FTC Settles with Warner Bros. Over Influencer Campaign

My posts may include paid links for which I earn a commission.

The FTC has once again invoked the .com Disclosures, this time in a lawsuit against Warner Bros. (WB) over an influencer campaign for video games. The FTC announced today that it has settled the lawsuit in which it alleged that WB “failed[ed] to adequately disclose that it paid online influencers” to post positive game reviews on YouTube and social media. An advertising agency named “Plaid Social Labs” was hired to create the campaign.

What’s really interesting about this case is that WB did require the influencers to “disclose” and gave specific instructions. Read on to find out why the disclosure requirements were still not adequate.

The Influencer Campaign

WB not only gave the games to the influencers for free but also paid the influencers for their work. The requirements of the influencers included terms we often see like:

• The video would include a call to action (CTA) for viewers to learn more about the game.
• The video would promote a “positive sentiment” about the game.
• The video would not communicate a “negative sentiment” or show “bugs or glitches.”
• The influencer would have to post the review once on Twitter or Facebook.

Because of these requirements, the FTC deemed the videos “sponsored advertisements.”

WB actually did include in the terms that the influencers had to disclose their sponsorships in a particular way. Those requirements included:

• The YouTube description box would include “information about the game above the fold.”
• The description box would include an FTC disclaimer that the post was sponsored.

The FTC alleged that because of this placement, the sponsorship was not “visible without consumers having to scroll down or click on a link.” In addition, the influencers were not required to place a disclosure clearly and conspicuously in the video itself. Also, when the videos were promoted on Twitter of Facebook, consumers were even less likely to see the disclosure information.

This paragraph in the Complaint was particularly interesting to me:

“On at least two occasions, the YouTube influencers disclosed only that they had been
given early access to the game, and did not adequately disclose that they had also been paid to
post the video. For example, one influencer’s disclosure states: “This has been one of my favorite sponsored games, so thanks that I could play it for free!!” This statement implies that the only compensation this YouTube influencer received was free access to the Shadow of Mordor video game. In fact, this YouTube influencer also received monetary compensation of thousands of dollars in return for his positive gameplay video and social media postings about Shadow of Mordor.”

This calls into question the type of language some of us have been using when we receive a free product but also a flat payment or a performance based commission.

The WB Settlement

An Agreement Containing Consent Order shows the settlement between the FTC and WB. Once again the influencers were not impacted (but that doesn’t mean we shouldn’t be doing the right thing–keep reading to see why). The Definitions section reiterates some of the things we have known for awhile. In particular it gives more detail about what “Clearly and Conspicuously” means including:

•  “A visual disclosure, by its size, contrast, location, the length of time it appears,
  and other characteristics, must stand out from any accompanying text or other
  visual elements so that it is easily noticed, read, and understood.”
• “An audible disclosure, including by telephone or streaming video, must be
  delivered in a volume, speed, and cadence sufficient for ordinary consumers to
  easily hear and understand it.”
• “In any communication using an interactive electronic medium, such as the internet
  or software, the disclosure must be unavoidable.”

In the Settlement, WB is essentially put on notice that it will not violate any of these rules in any future influencer campaign. It will also in future campaigns have to:

• Provide influencers with a statement of THEIR responsibility to disclose and have the influencer sign and date they received the statement and will comply with it.
• Establish a system to monitor and review the disclosures.
• Immediately terminate and cease payment to any influencer who does not comply. If they believe it was inadvertent, they can give them a chance to fix it before terminating them. 
• Create and maintain reports showing the monitoring.

Takeaways for Bloggers, Affiliate Marketers, and Other Influencers

As with some of the other actions, the FTC is taking a case and making it the example that other advertisers need to start following. Some of the things we can learn from this:

• Advertisers/Agencies are obligated to inform the bloggers/influencers about the disclosure rules. They should be very specific in their requirements.
• Bloggers/Influencers may not be held liable by the FTC right now, but the advertiser can cancel your payment immediately even after you have done all the work if you did not disclose properly.
• Even if you are technically disclosing, if the disclosure is not effective, the FTC can still come after you.
• Even though this was an “influencer” case, the Guidelines are the exact same that are applied to affiliate marketing.
• Influencer campaigns that use video are now put on notice of how the Guidelines apply to them.

What do you think about this new case? Does it apply to anything you are currently doing?

More Reading:

Full FTC case including the timeline, Complaint, Exhibits, etc.

Affiliates Take Note: New FTC Disclosure Guidelines (I keep this post updated frequently)