FTC Settles With Machinima Over YouTube Videos of Influential Gamers

The videos touted Xbox games without revealing paid endorsements.
Courtesy of Machinima

For some time now, the Federal Trade Commission has been warning that advertisers could get into trouble for paying celebrities to blog or tweet endorsements without proper disclosure. On Wednesday, the regulatory agency took another step by announcing it had come to a settlement with Machinima for paying "influencers" to post YouTube videos endorsing Microsoft’s Xbox One system and several games.

According to an FTC release, two unnamed endorsers were paid $15,000 and $30,000 for producing You Tube videos that garnered 250,000 and 730,000 views, respectively. Machinima also had another marketing program that paid its influencers by how many views they generated. The endorsers also got access to pre-release versions of the Xbox One console and video games.

The marketing programs ran into trouble for lack of disclosures.

"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 in a statement. "That’s true whether the endorsement appears in a video or any other media."

Per the settlement, Machinima has admitted no wrongdoing, but has agreed to stop such deceptive conduct.

The FTC has decided not to pursue charges against Microsoft and its ad agency, Starcom MediaVest Group.

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