Company Settles FTC Charges Over Misleading Endorsements

A public relations agency hired by a video game developer agreed to settle FTC charges that it engaged in deceptive advertising by having employees pose as independent consumers and post favorable reviews of the games. When posting the reviews, the employees did not disclose that they worked for a firm that was hired by the developer.

Under the proposed settlement, the agency is required to remove previous posts that misrepresent the authors as independent consumers. The agreement also bars the agency from misrepresenting that an individual is an independent consumer in the future, and from making endorsements unless the authors disclose any relevant connections they have with the seller.

As we have noted in previous posts -- click here and here, for example -- endorsers are required to disclose any material connections to the companies whose products they endorse. Companies would be well-advised to establish written policies designed to ensure that their employees, bloggers, and other agents make the required disclosures. In addition, companies should closely monitor bloggers and take actions against those that do not comply with their policies.

Tags: Social Media