The Federal Trade Commision (FTC) has decided that Machinima failed to adequately disclose that their influencers (YouTubers) were being paid to offer "seeming objective opinions" on the Xbox One, thus using deceptive marketing. According to the FTC, Microsoft and the advertisement company they used to book the Machinima influencers are not at fault for the deception, despite their roles in the event.
“When people see a product touted online, they have a right to know whether they’re looking at an authentic opinion or a paid marketing pitch,” said Jessica Rich, Director of the Bureau of Consumer Protection.
Over a year ago, it was uncovered that a pair of influencers in the Machinima network had been paid $15,000 and $30,000 to produce a video each that endorsed the Xbox One, without outright saying that their "opinions" had been bought.
From here on out, Machinima is prohibited from using similar deceptive conduct in the future and must clearly disclose when they are paying their influencers to promote a product. Machinima and their influencers must "prominently disclose any material connection between the endorser and the advertiser, and prohibits Machinima from compensating any influencer who has not made the required disclosures. In addition, it requires the company to follow up within 90 days of the start of a campaign to ensure the disclosures are still being made."
It will be very interesting to see how this plays out in the future, and to see just how many videos are actually paid promotions.
