Saturday, 25 May 2024

Machinima Agrees to Settlement with FTC over Deceptive Practices

Update: Following the recent news of the Federal Trade Commission (FTC) pursuing action against Machinima for deceptive practices related to a Microsoft ad campaign, the company has agreed to settlement terms. In this settlement, Machinima has taken responsibility for influencers in its network, ensuring that proper disclosures are displayed transparently and clearly.

Ensuring Proper Disclosures

As part of the agreement, Machinima must implement a process to review its partners’ content for appropriate disclosures. These disclosures must be present on-screen, in every social media post, and any communication where compensation is exchanged for coverage. This measure ensures that viewers are aware of any promotional content.

Reviewing Videos for Disclosure

Machinima is also required to review every video tied to a promotion, such as the Microsoft campaign, before issuing compensation. If mandatory disclosures are missing, the video will be rejected, and the influencer will be informed. In addition, content creators who fail to disclose appropriately will be ineligible for future promotional opportunities until the issue is resolved.

Surprise Re-Review of Content

To maintain transparency, Machinima must conduct surprise re-reviews of its paid influencers’ content within 14 to 90 days of posting. If during the re-review, the content does not accurately and visibly disclose the paid endorsement, the influencer will receive a warning. Repeated offenses will disqualify them from future earning opportunities.

FTC Monitoring Program

In order to ensure compliance, the FTC has established a monitoring program. Machinima is required to maintain five years of review records and may be called upon to provide evidence of compliance at any time.

Long-Term Settlement

This settlement will remain in effect for 20 years from the most recent complaint. As a result, Machinima is expected to present a plan for monitoring its practices to the FTC within three months of the settlement being ratified.

Machinima has effectively avoided a potentially significant penalty and has been put on notice by the FTC. Moving forward, it is crucial for the company to uphold its disclosure responsibilities, as the Commission will be less likely to settle should similar issues arise again.

Update: Alongside the complaint against Machinima, the FTC has decided not to pursue Microsoft over the campaign. Microsoft has acknowledged the FTC’s recognition of the company’s vigorous compliance processes and procedures for sponsored campaigns.

Our Take

When addressing the issue of YouTube creators and Twitch streamers being transparent in their practices, it is important to note the distinction between developing best practices and violating FTC rules for disclosure. Machinima knowingly kept its arrangements confidential, which contradicts the need for transparency in enthusiast press and video personalities.

We commend the FTC for taking action against deceptive practices. It is essential to recognize that not all YouTubers and content creators are responsible for Machinima’s actions. Many are adhering to proper disclosure practices and should not be negatively affected by Machinima’s missteps.

FAQs

Q: What is the settlement between Machinima and the FTC?
A: The settlement requires Machinima to ensure influencers in its network properly disclose their affiliations and endorsements. It also mandates the review of promotional videos and surprise re-reviews of paid influencers’ content.

Q: How long does the settlement with the FTC last?
A: The settlement will be in effect for 20 years from the most recent complaint. Machinima must present a monitoring plan to the FTC within three months of the settlement being ratified.

Conclusion

Machinima’s agreement with the FTC regarding deceptive practices marks an important step towards greater transparency in influencer marketing. It is crucial for content creators and networks to follow proper disclosure guidelines to maintain the trust of their viewers. By taking responsibility and implementing comprehensive monitoring processes, Machinima can foster a more trustworthy and ethical environment within the industry.