FTC settles charges over 'Lord of the Rings' video game advertising

FTC settles charges over 'Lord of the Rings' video game advertising
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The Federal Trade Commission (FTC) on Monday settled charges against Warner Bros. after the Hollywood studio paid tens of thousands of dollars to YouTube stars to produce positive videos and reviews about a video game based on "Lord of The Rings."

The FTC accused the company of unfair and deceptive acts because there was only scant disclosure that the company bought and approved the videos and reviews.

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Specifically, Warner Bros. was accused of making false claims and a failure to properly disclose the paid endorsement. Warner Bros. did not admit or deny the charges as a term of the settlement. 

“Consumers have the right to know if reviewers are providing their own opinions or paid sales pitches. Companies like Warner Brothers need to be straight with consumers in their online ad campaigns," Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a statement

The FTC did not extract a fine from the Hollywood studio. Instead, Warner Bros. will be required to make clear sponsorship disclosures in the future. 

In anticipation of the 2014 release of the video game "Middle Earth: Shadow of Mordor," the company's video game division hired an advertising agency, Plaid Social Labs, to create a marketing campaign to create buzz about the game. The agency paid a number of popular content creators on YouTube to produce nearly 30 positive videos about the video game. 

The videos, which were approved by the company, were required to "promote a positive sentiment," to not show any bugs in the game, and to have a "strong" call to action to click a link to the game's website. 

The YouTube stars were also required to make one supportive social media post about the game. 

While the ad agency required disclosure that the videos were sponsored, many of those disclosures were buried in the description of the video. For example, the most popular video — made by PewDiePie and viewed 3.7 million times — included a short sentence in the description that noted "this video was sponsored by Warner Brothers."

The law usually requires sponsorship tags to be included inside the actual video. The FTC charged that the disclosures were not clear and conspicuous, as required.

The FTC has targeted similar kinds of false advertising in the video game industry in the past. Last year, it settled charges with the company Machinima for paying high-profile people to endorse Xbox One games.