FTC settles complaint about fake video game testimonials

Thu Aug 26, 2010 10:00pm EDT

The U.S. Federal Trade Commission has settled a complaint it made against a public relations firm accused of using employees to pose as ordinary customers to post reviews of video games on Apple's iTunes store, the agency said Thursday.

Reverb Communications, based in Twain Harte, California, has worked with several video game developers, and employees of the firm posted several positive reviews of their clients' video games at iTunes between November 2008 and May 2009, the FTC said in its complaint, filed this year. Reverb engaged in deceptive advertising by using iTunes account names that gave readers the impression the reviews were written by disinterested consumers, the FTC said.

Reverb employees and owner Tracie Snitker did not disclose that they were hired to promote the games and often received a percentage of the sales, the FTC said in a press release. Those facts would have been relevant to consumers who saw the endorsements, the agency said.

Online public relations or advertising campaigns disguised as grassroots support for a product are often called "astroturfing." This is likely the first astroturfing case the FTC has settled, said Stacey Ferguson, a staff attorney in the FTC's Bureau of Consumer Protection.

While astroturfing has been common online for years, it can be a violation of the FTC Act, Ferguson said. Under the act, it's a deceptive practice for people with material connections to products or services to promote them without disclosing their interests, she said.

"Just because it's been happening doesn't mean it should still happen," she said.

Reverb agreed to the settlement after "it became apparent that we would never agree on the facts of the situation," Snitker said in an e-mail.

"Rather than continuing to spend time and money arguing, and laying off employees to fight what we believed was a frivolous matter, we settled this case and ended the discussion because as the FTC states: 'The consent agreement is for settlement purposes only and does not constitute admission by the respondents of a law violation,'" she said.

In its revised endorsements and testimonials guide issued last year, the FTC ruled that an 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. The FTC will review problems on a case-by-case basis, it said then.

Under the proposed settlement, Reverb and 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.

The FTC complaint did not name what video games Reverb employees reviewed on iTunes. However, Reverb employees posted comments such as "amazing new game," "one of the best" and "one of the best apps just got better," the FTC complaint said.

One Reverb review said a developer hit "another home run" with its new game.

Reverb's website says the company has worked with several video game developers, including Harmonix Music Systems, developer of Guitar Hero and Rock Band; Phantom EFX, developer of the Real Deal line of casino games; and Cryptic Studios, developer of Star Trek Online and Champions Online.

The settlement doesn't include a fine, but the FTC can seek fines if Reverb violates the settlement order.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantusG. Grant's e-mail address is grant_gross@idg.com.

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Comments (2)
SaveOurSanity wrote:
This is a real issue but what about companies that advertise as “Reputation Defenders”? One of the adds I heard says they will “bury” negative comments/reviews of you/your business etc. They should be regulated/banned from falsely promoting peer/personal reviews.

Aug 27, 2010 10:49am EDT  --  Report as abuse
amandavega wrote:
This is exactly why you need seasoned firms with compliance departments to handle your social media. This sort of thing happens all of the time because anyone can claim to be a social media expert. There are very few of us with complete compliance teams on staff that handle the understanding and navigation of the FTC, FDA, FINRA, and HIPAA when managing social media. It’s actually pretty easy to follow FTC guidelines and still accomplish what you need in social and also to help with reputation issues. If companies would (a) actually be actively social and (b) entice customers through an amazing experience or product to actually speak honestly on their behalf they would all be better off.

Amanda Vega
http://www.amandavega.com
Social Media, PR, Compliance

Aug 27, 2010 12:17pm EDT  --  Report as abuse
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