FTC settles complaint about fake video game testimonials

IDG News Service - The U.S. Federal Trade Commission (FTC) has settled a complaint it made against a public relations firm accused of using employees to pose as ordinary customers to post reviews of video games on Apple's iTunes store, the agency said Thursday.

Reverb Communications, based in Twain Harte, California, has worked with several video game developers, and employees of the firm posted several positive reviews of their clients' video games at iTunes between November 2008 and May 2009, the FTC said in its complaint, filed this year. Reverb engaged in deceptive advertising by using iTunes account names that gave readers the impression the reviews were written by disinterested consumers, the FTC said.

Reverb employees and owner Tracie Snitker did not disclose that they were hired to promote the games and often received a percentage of the sales, the FTC said in a press release. Those facts would have been relevant to consumers who saw the endorsements, the agency said.

Online public relations or advertising campaigns disguised as grassroots support for a product are often called "astroturfing." This is likely the first astroturfing case the FTC has settled, said Stacey Ferguson, a staff attorney in the FTC's Bureau of Consumer Protection.

While astroturfing has been common online for years, it can be a violation of the FTC Act, Ferguson said. Under the act, it's a deceptive practice for people with material connections to products or services to promote them without disclosing their interests, she said.

"Just because it's been happening doesn't mean it should still happen," she said.

Reverb agreed to the settlement after "it became apparent that we would never agree on the facts of the situation," Snitker said in an e-mail.

"Rather than continuing to spend time and money arguing, and laying off employees to fight what we believed was a frivolous matter, we settled this case and ended the discussion because as the FTC states: 'The consent agreement is for settlement purposes only and does not constitute admission by the respondents of a law violation,'" she said.

In its revised endorsements and testimonials guide issued last year, the FTC ruled that an online post by a person connected to the seller, or someone who receives cash or in-kind payment to review a product or service, should disclose the material connection the reviewer shares with the seller of the product or service. This applies to employees of both the seller and the seller's advertising agency. The FTC will review problems on a case-by-case basis, it said then.

Under the proposed settlement, Reverb and Snitker are required to remove any previously posted endorsements that misrepresent the authors as independent users or ordinary consumers and that fail to disclose a connection between Reverb and Snitker and the seller of a product or service. The agreement also bars Reverb and Snitker from misrepresenting that the user or endorser is an independent, ordinary consumer and from making endorsement or user claims about a product or service unless they disclose any relevant connections that they have with the seller of the product or service.