7 ms·

Warner Bros Settles FTC Charges It Failed to Disclose It Paid Online Influencers

137 points by kelukelugames 10y ago

a_small_island 10y ago
>"Instead, according to the complaint, Warner Bros. instructed influencers to place the disclosures in the description box appearing below the video. Because Warner Bros. also required other information to be placed in that box, the vast majority of sponsorship disclosures appeared “below the fold,” visible only if consumers clicked on the “Show More” button in the description box. In addition, when influencers posted YouTube videos on Facebook or Twitter, the posting did not include the “Show More” button, making it even less likely that consumers would see the sponsorship disclosures." So a disclosure in the notes box below a video is not enough. I wonder what this will mean for the guys from CSGOLotto [0] who are caught up in a seemingly worse controversy of non disclosure and more. [0] https://www.youtube.com/watch?v=_8fU2QG-lV0 https://www.youtube.com/watch?v=_8fU2QG-lV0
- ggrothendieck 10y ago
  The HN title misquotes the actual FTC site's title. The FTC title says it "failed to adquately disclose", not that it "failed to disclose". Omitting the word adequately changes the meaning substantially. In fact, WB did disclose the payment but it was the manner in which they disclosed it that the FTC objected to -- not the failure to disclose it.
  - deleted 10y ago
    [deleted]
  - Retric 10y ago
    Discloser requires more than posting a footnote in a random small town newspaper readership 12. You must clearly communicate to the recipient and failure to adequately disclose is failure to disclose.
    - protomyth 10y ago
      Actually, several laws for notification can be fulfilled by "posting a footnote in a small town newspaper readership 12". Its quite an amazing thing seeing the small things in the local paper of record.
      - jdmichal 10y ago
        Are you talking about the announcements typically required for public hearings? Because relating such announcements to disclosure is kind of strange. Disclosure is additional information about the message being conveyed, typically relating some bias that the recipient should be aware of before making decisions. Announcements, on the other hand, are precursors to the thing that actually matters, which is the hearing.
        protomyth 10y ago
        I'm talking about more than public hearings, there are many disclosure laws that require using the paper of record for a county or other area.
    - markcerqueira 10y ago
      Is this a claim, your opinion, your interpretation of laws, or something else in between?
  - sandworm101 10y ago
    Given how youtube vids can be embedded in websites, and how they play on mobile devices, I am surprised that the FTC didn't simply demand an in-vid notice, as is expected of disclaimers in TV commercials.
    - greglindahl 10y ago
      From the FTC announcement: "The FTC also alleges that Warner Bros. did not instruct the influencers to include sponsorship disclosures clearly and conspicuously in the video itself where consumers were likely to see or hear them."
    - DanBC 10y ago
      Note that in-video disclaimers are not enough in the UK, where the regulator (the Advertising Standards Authority) wants consumers to know before they click a link that it's sponsored content. https://www.asa.org.uk/News-resources/Media-Centre/2015/New-vlogging-advertising-guidance.aspx#.V4VTrFQrK01 https://www.asa.org.uk/News-resources/Media-Centre/2015/New-... https://www.cap.org.uk/Advice-Training-on-the-rules/Advice-Online-Database/Video-blogs-Scenarios.aspx#.V4VTrlQrK01 https://www.cap.org.uk/Advice-Training-on-the-rules/Advice-O...
ebbv 10y ago
Unfortunately this doesn't include what kind of fine WB has to pay, that will come out later. I hope it's stiff. This kind of deception has to cost more than it benefits the company if they are going to be deterred from it. Unfortunately at the moment this kind of thing is going on constantly, and even when there are disclosures that it's sponsored "reviews" the disclaimers are usually as subtle as possible. Video games became the biggest entertainment industry in the last 20 years and as a result a lot of greedy people with no moral compass have flooded into it to cash in.
- us0r 10y ago
  There will be no monetary fine.
- mtgx 10y ago
  > I hope it's stiff. I doubt it's more than a few million dollars if that. I wonder why the FTC even had to settle for this. Warner was clearly in the wrong. Government agencies are way too quick to settle these days. Sure, a trial would be much harder, but also much more effective in stopping corporate illegal activities in the future. Cheap settlements are just the cost of doing business and I doubt they serve as any deterrent at all.
  - jonnathanson 10y ago
    Typically speaking, a federal regulatory body's enforcement calculus follows this procedure: 1. How big is the target company? 2. How scary are its lawyers? 3. Do we expect the company to put up a fight? 4. Is the fight worth it? (e.g., Are there important precedents at stake? Can we make an example of the company in question?) Ninety-nine times out of a hundred, the desire to pursue the fight in court fizzles out at Step 4. (And sometimes there's an ancillary Step 4a: "How many other battles are we fighting right now?") I'm not being glib here; I'm just being cynical, but realistic. This is pretty much how my friends at various agencies have described it to me. It doesn't seem too farfetched, if perhaps a bit simplified.
    - cmdrfred 10y ago
Kenji 10y ago
Does anyone really trust online game reviews? Game media is corrupt to the bone and the first thing I think when I see a positive review is that it was bought. Besides, the culture of game media is often far, far away from true gamer culture. That's why I often just watch raw gameplay footage, then I can make up my mind myself. I think this is a non-issue. “Consumers have the right to know if reviewers are providing their own opinions or paid sales pitches,” I think consumers should start to learn to think for themselves and stop relying on the state, bans and fines.
- ccvannorman 10y ago
  > I think consumers should start to learn to think for themselves and stop relying on the state, bans and fines. An idealist viewpoint, and perhaps a correct one. But in practice I support government rules against intentional misleading of audiences for the same reason I support government rules against lying about ingredients in food.
  - Kenji 10y ago
    Okay, lying about what's inside a can of food is nothing short of fraud, that is, not fulfilling your contractual obligation to the buyer properly, even worse if it's intentionally. I don't want to abolish contracts, that would be ridiculous. However, what goes on between a game company and PewDiePie, in monetary but also in other terms, is their private matter. I don't see a reason why it should be illegal to pay PewDiePie to be enthusiastic about the game when it's actually garbage. No contract was violated here. PewDiePie is not an authority on this game and what he says matters not for any purchase contract. So people who are mislead by him are fools themselves for relying on random internet stuff.
    - DanBC 10y ago
      > I don't see a reason why it should be illegal to pay PewDiePie to be enthusiastic about the game when it's actually garbage. That's totally legal. What's illegal is for them to not disclose the payment.
- 10y ago
Bjartr 10y ago
>Warner Bros. is barred from failing to make such disclosures in the future So were they not "barred from failing to make" these mandatory disclosures previously? I wonder what the world would be like if the laws people had to follow had this same pattern of "You broke the rules? Well your punishment is that you now have to really actually follow the rules next time."
- jgmrequel 10y ago
  They were barred before - I think this language means next time they are caught, it'll hopefully be much worse.
  - r00fus 10y ago
    So a slap on the wrist...
    - AJ007 10y ago
      Generally if you violate a previous FTC agreement the results are pretty serious.
    - rayiner 10y ago
      A slap on the wrist is appropriate here. There were apparently 5.5 million views of sponsored content. The total value of that commerce is a few thousand dollars in AdSense revenue.
      - cmdrfred 10y ago
        > The total value of that commerce is a few thousand dollars in AdSense revenue Incorrect. Youtube videos are reportedly from personalities giving an honest opinion. Adsense is advertising. Most people know the difference and if they made a choice to buy the game based on that information they have been defrauded. 5.5 Million * 60 = $330 Million, not a few thousand dollars.
        10y ago
MichaelBurge 10y ago
This seems like an overreach of the government's power more than anything. And if anyone is to blame, it seems like the responsibility should be on the Youtube creator to do the disclosure and not Warner Bros(so they should fine "PewDiePie" rather than Warner Bros), since they ultimately broadcast the noncompliant material. It seems like this happens in the newspapers all the time. I'm actually unfamiliar with the FTCA. I reread pg's essay[1] and I guess the main difference with sponsored content in the newspapers is that the reporters don't directly benefit from the sponsored content. I don't know - there's an awful lot of sponsored content on news sites nowadays, and I always imagined the reporters did it for the money. Is it actually illegal to take money to publish sponsored content in a newspaper without providing a notice of this? [1] http://www.paulgraham.com/submarine.html http://www.paulgraham.com/submarine.html
- jrgifford 10y ago
  I think that an important part of it is that WB controlled where the disclosure had to be (below the fold in the notes section). Because of that, it's WB fault, not the YouTube creator.
- cloudjacker 10y ago
  Settlements aren't overreach , an actual court ruling would be The federal government has a long history of strong arming into compliance
  - MichaelBurge 10y ago
    Point taken. From the wording below, it appears that it didn't even begin to get to court, so maybe 'settlement' is the wrong word too. It sounds like all they really did was issue a complaint, which WB agreed to listen to. -------------- The Commission vote to issue the administrative complaint and to accept the proposed consent agreement was 3-0. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through August 10, 2016, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit comments electronically by following the instructions in the “Invitation to Comment” part of the “Supplementary Information” section of the Federal Register notice.
gnicholas 10y ago
Does anyone know where to report violations like this? I've seen many in the past, and I've tried using the FTC report a violation tool, but none of the categories seem to hit this. Too bad, because crowdsourcing the detection of these violations would make the FTC's job a lot easier!
- AJ007 10y ago
  https://www.ftc.gov/faq/consumer-protection/submit-consumer-complaint-ftc https://www.ftc.gov/faq/consumer-protection/submit-consumer-... Understand the FTC gets a ton of complaints, in many cases for things that are much more egregious. I'm not sure what the weights between volume of complaints and detailed documentation of a problem contribute to initiating an investigation.
  - gnicholas 10y ago
    Unfortunately that link doesn't lead to anything that can be used to submit this type of complaint. The categories are all wrong, and even in the general/catch-all category, the questions don't fit this type of issue. I realize the FTC gets lots of complaints, and that some issues they deal with are more egregious than this. However, violations of this nature (but related to other products) are potentially very serious and can have repercussions for both violators' customers and competitors.
    - uptown 10y ago
      Can you link to an example?
      - gnicholas 10y ago
        I'm the founder of an edtech startup, so that's the area where I have the most experience. There are many teacher/bloggers who have blogs where they talk about edtech tools they like. They give the appearance—both to readers, and to companies—that they're blogging/tweeting/etc. about things because they think they are effective tools for learning. The blogs have intake forms for requesting a product review OR requesting sponsored content, but the auto-emailed response is just a rate card. Following up to ask about product reviews (and even mentioning having won major relevant awards, which indicate a review-worthy product) leads to more rate card responses. In some cases, it's pretty clear that all of the posts are bought and paid for by companies. Some bloggers have no disclaimers to this effect (and other teachers who read the site would have no idea that sponsored content exists, since they just read the "reviews" and don't look at the pages that refer to sponsorship). Other bloggers have a generic disclaimer, at the very bottom of a sidebar (which extends so far vertically past the primary content, no one ever sees it) that says that some content is paid for. But rare is the case where the blogger actually says "This post was paid for" and "This post was not paid for"—which is precisely what teachers and parents who read the site would want to know. I'd rather not provide links to offending sites, since I'm not anon here and don't want teacher bloggers to hate me and my company. I realize they don't make much money and need to supplement where they can (my mother and wife are educators), but there are more transparent/legal ways to do this.
AJ007 10y ago
Interesting fact, this is the first public reference to Pewdie Pie in an FTC action, but the FTC commissioner referred to him during a keynote speech back in 2015. https://www.ftc.gov/system/files/documents/public_statements/804731/150928nadaspeech.pdf https://www.ftc.gov/system/files/documents/public_statements...
chrischen 10y ago
Are the receivers of the money liable for any penalties? Seems like they should be equally liable, if not more so.
a3n 10y ago
https://en.wikipedia.org/wiki/Payola https://en.wikipedia.org/wiki/Payola

137 points by kelukelugames 10y ago

>"Instead, according to the complaint, Warner Bros. instructed influencers to place the disclosures in the description box appearing below the video. Because Warner Bros. also required other information to be placed in that box, the vast majority of sponsorship disclosures appeared “below the fold,” visible only if consumers clicked on the “Show More” button in the description box. In addition, when influencers posted YouTube videos on Facebook or Twitter, the posting did not include the “Show More” button, making it even less likely that consumers would see the sponsorship disclosures." So a disclosure in the notes box below a video is not enough. I wonder what this will mean for the guys from CSGOLotto [0] who are caught up in a seemingly worse controversy of non disclosure and more. [0] https://www.youtube.com/watch?v=_8fU2QG-lV0 https://www.youtube.com/watch?v=_8fU2QG-lV0

ggrothendieck 10y ago
The HN title misquotes the actual FTC site's title. The FTC title says it "failed to adquately disclose", not that it "failed to disclose". Omitting the word adequately changes the meaning substantially. In fact, WB did disclose the payment but it was the manner in which they disclosed it that the FTC objected to -- not the failure to disclose it.
- deleted 10y ago
  [deleted]
- Retric 10y ago
  Discloser requires more than posting a footnote in a random small town newspaper readership 12. You must clearly communicate to the recipient and failure to adequately disclose is failure to disclose.
  - protomyth 10y ago
    Actually, several laws for notification can be fulfilled by "posting a footnote in a small town newspaper readership 12". Its quite an amazing thing seeing the small things in the local paper of record.
    - jdmichal 10y ago
      Are you talking about the announcements typically required for public hearings? Because relating such announcements to disclosure is kind of strange. Disclosure is additional information about the message being conveyed, typically relating some bias that the recipient should be aware of before making decisions. Announcements, on the other hand, are precursors to the thing that actually matters, which is the hearing.
      - protomyth 10y ago
        I'm talking about more than public hearings, there are many disclosure laws that require using the paper of record for a county or other area.
  - markcerqueira 10y ago
    Is this a claim, your opinion, your interpretation of laws, or something else in between?
- sandworm101 10y ago
  Given how youtube vids can be embedded in websites, and how they play on mobile devices, I am surprised that the FTC didn't simply demand an in-vid notice, as is expected of disclaimers in TV commercials.
  - greglindahl 10y ago
    From the FTC announcement: "The FTC also alleges that Warner Bros. did not instruct the influencers to include sponsorship disclosures clearly and conspicuously in the video itself where consumers were likely to see or hear them."
  - DanBC 10y ago
    Note that in-video disclaimers are not enough in the UK, where the regulator (the Advertising Standards Authority) wants consumers to know before they click a link that it's sponsored content. https://www.asa.org.uk/News-resources/Media-Centre/2015/New-vlogging-advertising-guidance.aspx#.V4VTrFQrK01 https://www.asa.org.uk/News-resources/Media-Centre/2015/New-... https://www.cap.org.uk/Advice-Training-on-the-rules/Advice-Online-Database/Video-blogs-Scenarios.aspx#.V4VTrlQrK01 https://www.cap.org.uk/Advice-Training-on-the-rules/Advice-O...

ebbv 10y ago

Unfortunately this doesn't include what kind of fine WB has to pay, that will come out later. I hope it's stiff. This kind of deception has to cost more than it benefits the company if they are going to be deterred from it. Unfortunately at the moment this kind of thing is going on constantly, and even when there are disclosures that it's sponsored "reviews" the disclaimers are usually as subtle as possible. Video games became the biggest entertainment industry in the last 20 years and as a result a lot of greedy people with no moral compass have flooded into it to cash in.

us0r 10y ago
There will be no monetary fine.
mtgx 10y ago
> I hope it's stiff. I doubt it's more than a few million dollars if that. I wonder why the FTC even had to settle for this. Warner was clearly in the wrong. Government agencies are way too quick to settle these days. Sure, a trial would be much harder, but also much more effective in stopping corporate illegal activities in the future. Cheap settlements are just the cost of doing business and I doubt they serve as any deterrent at all.
- jonnathanson 10y ago
  Typically speaking, a federal regulatory body's enforcement calculus follows this procedure: 1. How big is the target company? 2. How scary are its lawyers? 3. Do we expect the company to put up a fight? 4. Is the fight worth it? (e.g., Are there important precedents at stake? Can we make an example of the company in question?) Ninety-nine times out of a hundred, the desire to pursue the fight in court fizzles out at Step 4. (And sometimes there's an ancillary Step 4a: "How many other battles are we fighting right now?") I'm not being glib here; I'm just being cynical, but realistic. This is pretty much how my friends at various agencies have described it to me. It doesn't seem too farfetched, if perhaps a bit simplified.
  - cmdrfred 10y ago

Kenji 10y ago

Does anyone really trust online game reviews? Game media is corrupt to the bone and the first thing I think when I see a positive review is that it was bought. Besides, the culture of game media is often far, far away from true gamer culture. That's why I often just watch raw gameplay footage, then I can make up my mind myself. I think this is a non-issue. “Consumers have the right to know if reviewers are providing their own opinions or paid sales pitches,” I think consumers should start to learn to think for themselves and stop relying on the state, bans and fines.

ccvannorman 10y ago
> I think consumers should start to learn to think for themselves and stop relying on the state, bans and fines. An idealist viewpoint, and perhaps a correct one. But in practice I support government rules against intentional misleading of audiences for the same reason I support government rules against lying about ingredients in food.
- Kenji 10y ago
  Okay, lying about what's inside a can of food is nothing short of fraud, that is, not fulfilling your contractual obligation to the buyer properly, even worse if it's intentionally. I don't want to abolish contracts, that would be ridiculous. However, what goes on between a game company and PewDiePie, in monetary but also in other terms, is their private matter. I don't see a reason why it should be illegal to pay PewDiePie to be enthusiastic about the game when it's actually garbage. No contract was violated here. PewDiePie is not an authority on this game and what he says matters not for any purchase contract. So people who are mislead by him are fools themselves for relying on random internet stuff.
  - DanBC 10y ago
    > I don't see a reason why it should be illegal to pay PewDiePie to be enthusiastic about the game when it's actually garbage. That's totally legal. What's illegal is for them to not disclose the payment.
10y ago

Bjartr 10y ago

>Warner Bros. is barred from failing to make such disclosures in the future So were they not "barred from failing to make" these mandatory disclosures previously? I wonder what the world would be like if the laws people had to follow had this same pattern of "You broke the rules? Well your punishment is that you now have to really actually follow the rules next time."

jgmrequel 10y ago
They were barred before - I think this language means next time they are caught, it'll hopefully be much worse.
- r00fus 10y ago
  So a slap on the wrist...
  - AJ007 10y ago
    Generally if you violate a previous FTC agreement the results are pretty serious.
  - rayiner 10y ago
    A slap on the wrist is appropriate here. There were apparently 5.5 million views of sponsored content. The total value of that commerce is a few thousand dollars in AdSense revenue.
    - cmdrfred 10y ago
      > The total value of that commerce is a few thousand dollars in AdSense revenue Incorrect. Youtube videos are reportedly from personalities giving an honest opinion. Adsense is advertising. Most people know the difference and if they made a choice to buy the game based on that information they have been defrauded. 5.5 Million * 60 = $330 Million, not a few thousand dollars.
      - 10y ago

MichaelBurge 10y ago

This seems like an overreach of the government's power more than anything. And if anyone is to blame, it seems like the responsibility should be on the Youtube creator to do the disclosure and not Warner Bros(so they should fine "PewDiePie" rather than Warner Bros), since they ultimately broadcast the noncompliant material. It seems like this happens in the newspapers all the time. I'm actually unfamiliar with the FTCA. I reread pg's essay[1] and I guess the main difference with sponsored content in the newspapers is that the reporters don't directly benefit from the sponsored content. I don't know - there's an awful lot of sponsored content on news sites nowadays, and I always imagined the reporters did it for the money. Is it actually illegal to take money to publish sponsored content in a newspaper without providing a notice of this? [1] http://www.paulgraham.com/submarine.html http://www.paulgraham.com/submarine.html

jrgifford 10y ago
I think that an important part of it is that WB controlled where the disclosure had to be (below the fold in the notes section). Because of that, it's WB fault, not the YouTube creator.
cloudjacker 10y ago
Settlements aren't overreach , an actual court ruling would be The federal government has a long history of strong arming into compliance
- MichaelBurge 10y ago
  Point taken. From the wording below, it appears that it didn't even begin to get to court, so maybe 'settlement' is the wrong word too. It sounds like all they really did was issue a complaint, which WB agreed to listen to. -------------- The Commission vote to issue the administrative complaint and to accept the proposed consent agreement was 3-0. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through August 10, 2016, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit comments electronically by following the instructions in the “Invitation to Comment” part of the “Supplementary Information” section of the Federal Register notice.

gnicholas 10y ago

Does anyone know where to report violations like this? I've seen many in the past, and I've tried using the FTC report a violation tool, but none of the categories seem to hit this. Too bad, because crowdsourcing the detection of these violations would make the FTC's job a lot easier!

AJ007 10y ago
https://www.ftc.gov/faq/consumer-protection/submit-consumer-complaint-ftc https://www.ftc.gov/faq/consumer-protection/submit-consumer-... Understand the FTC gets a ton of complaints, in many cases for things that are much more egregious. I'm not sure what the weights between volume of complaints and detailed documentation of a problem contribute to initiating an investigation.
- gnicholas 10y ago
  Unfortunately that link doesn't lead to anything that can be used to submit this type of complaint. The categories are all wrong, and even in the general/catch-all category, the questions don't fit this type of issue. I realize the FTC gets lots of complaints, and that some issues they deal with are more egregious than this. However, violations of this nature (but related to other products) are potentially very serious and can have repercussions for both violators' customers and competitors.
  - uptown 10y ago
    Can you link to an example?
    - gnicholas 10y ago
      I'm the founder of an edtech startup, so that's the area where I have the most experience. There are many teacher/bloggers who have blogs where they talk about edtech tools they like. They give the appearance—both to readers, and to companies—that they're blogging/tweeting/etc. about things because they think they are effective tools for learning. The blogs have intake forms for requesting a product review OR requesting sponsored content, but the auto-emailed response is just a rate card. Following up to ask about product reviews (and even mentioning having won major relevant awards, which indicate a review-worthy product) leads to more rate card responses. In some cases, it's pretty clear that all of the posts are bought and paid for by companies. Some bloggers have no disclaimers to this effect (and other teachers who read the site would have no idea that sponsored content exists, since they just read the "reviews" and don't look at the pages that refer to sponsorship). Other bloggers have a generic disclaimer, at the very bottom of a sidebar (which extends so far vertically past the primary content, no one ever sees it) that says that some content is paid for. But rare is the case where the blogger actually says "This post was paid for" and "This post was not paid for"—which is precisely what teachers and parents who read the site would want to know. I'd rather not provide links to offending sites, since I'm not anon here and don't want teacher bloggers to hate me and my company. I realize they don't make much money and need to supplement where they can (my mother and wife are educators), but there are more transparent/legal ways to do this.

AJ007 10y ago

Interesting fact, this is the first public reference to Pewdie Pie in an FTC action, but the FTC commissioner referred to him during a keynote speech back in 2015. https://www.ftc.gov/system/files/documents/public_statements/804731/150928nadaspeech.pdf https://www.ftc.gov/system/files/documents/public_statements...

chrischen 10y ago

Are the receivers of the money liable for any penalties? Seems like they should be equally liable, if not more so.

a3n 10y ago

https://en.wikipedia.org/wiki/Payola https://en.wikipedia.org/wiki/Payola