In the first application of the new guidelines on testimonials and endorsements, the Federal Trade Commission reached a settlement with a public relations firm accused of illegally advertising its clients’ gaming applications by having employees pose as consumers and post reviews on iTunes.
Under the proposed settlement, Reverb Communications will be required to remove any previously posted endorsements by authors posing as independent users who were in fact paid employees. The company and its sole owner, Tracie Snitker, will also be barred from making future claims without disclosing any relevant connections to the seller of the product or service.
The FTC alleged that Reverb, a public relations and marketing firm, posted reviews about its clients’ mobile gaming applications at Apple’s iTunes store between November 2008 and May 2009. The reviews did not disclose that the authors were hired to promote the games, according to the FTC complaint, nor that they received a percentage of the sales. Instead, they purported to be from independent consumers. Reverb employees gave their clients four and five star ratings and submitted glowing comments such as “Amazing new game,” “ONE of the BEST,” and “Really Cool Game,” according to the complaint.
To read the consent order in In the Matter of Reverb Communications, Inc., click here.
Why it matters: The action is the first complaint issued pursuant to the FTC’s revised endorsements and testimonials guides. While the agency investigated Ann Taylor earlier this year for giving gifts to bloggers, no charges were filed. Advertisers and marketers should remember that under the guides any endorsement by a person connected to the seller, or who receives cash or in-kind payment to review a product or service (including bloggers and celebrity endorsers), must disclose his or her material connection with the seller. The enforcement action against Reverb serves as a reminder that the guides apply to employees of both the seller and the seller’s advertising agency.