The Federal Trade Commission has outlined the implications of Microsoft’s and EA’s actions after it was found that they broke the commission’s guidelines regarding disclosure for endorsements. In so many words, they may already be investigating the two companies for violating the FTC Act itself.
As a quick review, two gaming Youtubers outed that they were contracted to make videos to help promote Xbox One, Battlefield 4, and Need For Speed Rivals. The way these contracts were written out, the Youtubers were not allowed to say anything negative regarding their products, and the terms of their contracts also did not allow them to disclose this clause.
Now the FTC has explained that the guidelines Microsoft and EA may have violated are to help advertisers and endorsers alike to comply with federal advertising law. These guidelines were first written out in 1980, and revised in 2009 to cover online media like Youtube videos. Now while the guidelines have no accompanying penalties or fines to them, they were written out to avoid violation of the FTC Act itself.
So, here’s the crux of the matter. The principle covered under the FTC Act that applies here is related to misleading advertising. Whether on YouTube or in any other media, if the endorser has a vested interest in the product they are advertising, say, they are related to the marketer, an employee, was paid or received something of value, than they have to make that interest clear. This knowledge is important to evaluate the value of the endorsement.
This is how things could play out. FTC will send warning letters to EA and Microsoft first. If the issue is not immediately resolved, they could then investigate the two for violation of the FTC Act itself, the consequences of which would be completely scandalous for the industry.
As it is now, however, EA and Microsoft have given out statements essentially affirming that they do follow FTC guidelines. As a matter of policy, FTC only reveals investigations after they find violations have actually been committed.
Are EA and Microsoft under hot water? We will not find out for sure until the FTC speaks up on this issue again.
Image is of the Xbox One.
