FTC Settles with Warner over Paid 'Influencers'

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

The settlement, which requires Warner Bros. to make clear disclosures in future sponsored content, comes four months after the Lord & Taylor settlement, which marked the first enforcement action under guidelines the FTC released in a policy statement last year.

According to the FTC, Warner Bros. paid the “influencers” thousands of dollars to post positive videos on YouTube and social media as part of a late-2014 digital marketing campaign. Through its advertising agency, Warner Bros. required influencers to not disclose any bugs or glitches they found in the game, according to the FTC.

Warner Bros. ran into trouble for what it did not require of the influencers: A clear disclosure that they had been paid ' and provided with a free advance-release version of the game ' by the company. (In some instances, the influencers disclosed that they had received an early-access version of the game but not that they had also been paid.)

Under the contracts, the influencers' videos were subject to Warner Bros. and the advertising agency's review and approval. On at least one occasion, Warner Bros. approved a video that lacked proper disclosure, according to the FTC.

The FTC named Plaid Social Labs as the advertising firm that oversaw the Warner Bros. campaign. In the Lord & Taylor matter, the FTC identified Nylon as the online fashion magazine that published a seemingly objective article about a clothing collection that was, in fact, paid for by the retailer.

In the 2015 guidance, the FTC made clear that its enforcement policy “doesn't apply just to advertisers,” noting that the agency has taken action against ad firms. “Everyone who participates directly or indirectly in creating or presenting native ads should make sure that ads don't mislead consumers about their commercial nature,” the FTC said.

But, with both Lord & Taylor and Warner Bros., the FTC declined to file charges against any other participants in the advertising campaigns. Explaining the decision not to charge Nylon or any of Lord & Taylor's paid influencers, Mary Engle, the leader of the agency's advertising practices division, said the FTC “traditionally considers the potential liability of all the various parties.”

“We really considered who, given the particular facts of the case, was the most responsible party. In this case, it seemed that it was Lord & Taylor,” Engle told The National Law Journal in March. “They had editorial control over the content of the Instagram posts as well as the Nylon article. It seemed like they were the appropriate party to pursue.”

C. Ryan Barber is a reporter with The National Law Journal, an ALM sibling of Entertainment Law & Finance. He can be reached at [email protected].