Twitter gets new ad cops

Federal regulators want to make sure that people know whether a rave review on Twitter or Facebook is a genuine endorsement from a stranger on the Internet or paid advertising.

The Federal Trade Commission (FTC) on Tuesday announced a settlement over allegations that Sony had misled people about the advanced technology on a handheld PlayStation Vita console. The commission accused employees at an advertising company, Deutsch LA, of promoting the device on Twitter without disclosing that they were tweeting ads instead of sincere consumer reviews.

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The charges were the first the FTC has ever brought against a company for tweeting about a company without disclosing their business ties to it. 

It likely won’t be the last.

“It’s safe to say that this is an issue that continues to have the agency’s attention, especially as social media grows in increasing importance and, frankly, the increasing importance of social media in video game advertising,” Tom Dahdouh, the head of the FTC’s western regional offices, told reporters after the announcement.

“It will only grow.”

The FTC framed its move to police deception on Twitter as a natural progression of its work. As the country has increasingly moved its conversations online, so too has the agency’s targeting of misleading messages.

“This is the same old kind of case, but the twist is this is the first time that they’ve gone after someone for making these claims on Twitter as opposed to making them on the Internet or on TV or somewhere else,” said David Vladeck, a Georgetown Law School professor and the former head of the FTC’s consumer protection bureau.

“This was inevitable.”

In its complaint, the FTC dug up an email from an assistant account executive asking other employees to “help us kick things off!” as the ad campaign got up to speed. 

“To generate buzz around the launch of the device, the PS Vita ad campaign will incorporate a #GAMECHANGER hashtag into nearly all creative executions,” the unnamed employee wrote to other staffers. “[T]o get the conversation started, we're asking YOU to Tweet about the PlayStation Vita using the #GAMECHANGER hashtag.”

Employees followed suit but never made clear in their tweets that they were ad agency employees, not normal consumers, the FTC alleged. That made their tweets “false and misleading” and subject to charges from the agency.

Under the FTC’s guidelines, advertisers have to “clearly and conspicuously” disclose if an advertising company is paying people to support a product.

In a frequently-asked-questions guide published to clear up confusion, the commission specifically suggested that people on Twitter include a statement such as “#paid” or “#ad” to note that a tweet was an advertisement and not an actual consumer recommendation.

“Any advertising agency that is reputable would know this,” Vladeck said.

The ad company, Deutsch LA, declined to discuss the details of the case.

In a statement, the company said it “appreciates the FTC's staff’s cooperation in bringing this matter to resolution” and noted that the settlement did not require it to admit to violating the law.

Not everyone is supportive of the FTC’s expanded jurisdiction, however.

Berin Szoka, the head of the libertarian TechFreedom think tank, said that the FTC’s action will force companies to either buy advertisements through Twitter or make their tweets “uglier and less effective” with the disclosure notices.

“The fact that the FTC waited five years to bring such an enforcement action probably indicates that the FTC understood how problematic it would be to regulate tweets and was reluctant to follow through on the implications” of its guidelines, which were issued amid a vocal debate in 2009, he said in an email to The Hill.

“The real story here isn't whether the FTC has struck the right balance,” he added. “It's that there's no check on the FTC's discretion to create de facto rules if it can build what it calls a ‘common law of settlements’ — without ever having to establish the costs of disclosure and weigh them against the benefits of authenticity.”