Machinima, Inc.
The FTC alleged that Machinima paid influencers to post Xbox One endorsement videos without adequately disclosing that the influencers were compensated.
Resolved. Refunded, settled, ceased operating, or the claim did not hold up. Kept for the record.
Identity
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- Registrations
- In the Matter of Machinima, Inc. (FTC administrative proceeding 142-3090, 2015)
- Locations
- California
- Jurisdictions
- United States (federal)
Paid endorsements lacked disclosure
Machinima, Inc. operated an online entertainment network and participated in an Xbox One marketing campaign managed by Microsoft’s advertising agency, Starcom MediaVest Group. The Federal Trade Commission alleged that Machinima paid influencers to post YouTube endorsement videos without adequately disclosing that compensation.
Machinima guaranteed Starcom that the videos would receive at least 19 million views. During one phase, Machinima paid two endorsers $15,000 and $30,000 for videos that received 250,000 and 730,000 views, respectively. During another phase, it offered a larger group $1 for every 1,000 views, up to $25,000. According to the FTC, Machinima did not require the influencers to disclose that they were paid.
The proposed consent order prohibited Machinima from representing an endorser as an independent user when that was not the case. It also required clear disclosure of material connections, prohibited compensation for influencers who failed to disclose those connections, and required follow-up within 90 days of a campaign’s start.
The Commission voted 5 to 0 to issue the administrative complaint and accept the proposed order for public comment. The release said the agreement would remain open for comment for 30 days before the Commission decided whether to make it final.
What is not established
The release presents the FTC’s allegations and a proposed consent order. It does not report a court finding that Machinima violated the law.
Sources
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- Enforcement action September 2, 2015
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First recorded September 2, 2015 · Last updated September 2, 2015