Warner Bros.’s “Paid to Play” Disclosures Draw FTC Action

Earlier this year, the Federal Trade Commission (FTC) went after Warner Bros. Home Entertainment Inc. for not clearly representing that several digital influencers were paid as part of a marketing campaign for the video game Middle Earth: Shadow of Mordor. (See our prior posts on FTC enforcement of its disclosure requirements.) According to the complaint, these influencers were paid amounts ranging from hundreds of dollars to tens of thousands of dollars and received advance-release copies of the game with instructions on how to promote the game. The sponsored videos were viewed more than 5.5 million times. One very popular influencer, Felix Kjellberg, known as “PewDiePie” on YouTube, created a video that has been viewed over 3.7 million times by itself.

While Kjellberg did disclose the video was sponsored by Warner Bros., the disclosure that “[t]his video was sponsored by Warner Brothers” required the viewer to scroll down beneath the video and click on a “Show More” button to see the text. Warner Bros. reportedly told participants to place the disclosure in this location. Another problem is that the disclosures would often end up being completely hidden when embedded onto Facebook or Twitter posts since the “Show More” button does not usually appear when YouTube videos are placed onto those platforms. Accordingly, the FTC found the sponsored content to mislead consumers into thinking they are the objective, independent opinions of video game enthusiasts or influencers.

This week, Warner Bros. settled the charges and the FTC issued an order mandating Warner Bros. to follow guidelines for clear disclosure in future marketing campaigns, including educating influencers on how to properly disclose the relationship, and monitoring for and enforcing compliance.

According to the FTC’s Endorsement Guide, the FTC recommends putting the disclosure in the video itself. Due to the nature of YouTube videos, the FTC states the following: “it’s easy for consumers to miss disclosures in the video description. Many people might watch the video without even seeing the description page, and those who do might not read the disclosure. The disclosure has the most chance of being effective if it is made clearly and prominently in the video itself. That’s not to say that you couldn’t have disclosures in both the video and the description.”

Although the influencers should bear some responsibility for making proper disclosures, the brunt of the responsibility will inevitably fall on the company paying for the advertisements (and that is who the FTC focuses upon). Thus, companies need to be aware of the FTC disclosure requirements and keep abreast of any updates to these requirements so that they can inform hired creators of disclosure obligations and monitor the same.

Ultimately, it does not pay to play games with the FTC—an easy-to-miss disclosure may be viewed the same as having none at all.