Machinima recently came under fire by the FTC, who cited that the group of YouTube users deceived viewers with videos posted about the Xbox One and its games.
Machinima failed to mention that Microsoft paid it and its group of users money for posting the videos, something that falls under the category of deceitful advertising.
Machinima and its group of "influencers" (those YouTube users that get lots of hits for the company) received money from Microsoft with the guarantee that all videos posted about the Xbox One and its games would get at least 19 million views.
So, instead of honest reviews, Machinima's YouTube users got a paid-for endorsement of the Xbox One prior to its release. Machinima and its influencers never once mentioned that they received money (up to $30,000 per video) to its viewers, although Microsoft specified the exact content each video contained.
"When people see a product touted online, they have a right to know whether they're looking at an authentic opinion or a paid marketing pitch," said Jessica Rich, Director of the Bureau of Consumer Protection. "That's true whether the endorsement appears in a video or any other media."
The FTC responded by prohibiting Machinima from engaging in such activity again and announced that it and its related YouTube posters have a responsibility to their viewers to disclose up front if a company has paid for the posting of a video. Machinima also has 90 days to make sure that all older videos that count as paid-for endorsements must contain a disclosure alerting viewers of this.
Machinima initially came under fire for its Xbox One videos last year, after which Microsoft asked the group to mark such videos as paid-for promotions. The FTC has closed its investigation of Microsoft and its advertising agency, placing fault with Machinima for its deceptive practices.
"Commission staff considered the fact that these appeared to be isolated incidents that occurred in spite of, and not in the absence of, policies and procedures designed to prevent such lapses," writes the FTC. "The companies also quickly required Machinima to remedy the situation after they learned that Machinima was paying influencers without making the necessary disclosures."
This new ruling doesn't just affect Machinima, though. All YouTube users might want to take precaution and disclose when they accept money for posting specific videos to their channels.
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Photo: Matt Cunnelly | Flickr
