Commission claims YouTubers failed to disclose financial relationships

Spawn Point

Tom “Syndicate” Cassell and Trevor “TmarTn” Martin serve up high-octane reviews and commentary on games and gaming culture on YouTube. Both are wildly popular – Cassell’s YouTube channel is one of the top 100 subscribed channels on the site – but both recently fell afoul of the Federal Trade Commission, which filed a complaint against the pair. It is the FTC’s first action against individual influencers.

Area of Effect

Martin and Cassell run the online gambling site CSGOLotto, which allows players in the online multiplayer game “Counter-Strike” to gamble using assets from the game. The FTC alleges that Martin, the company’s president, and Cassell, its vice president, created a series of YouTube videos on their channels promoting the site, portraying each of them as users of the site’s services – but never disclosing their personal involvement. They also mentioned the site through their social media accounts, without referencing their positions in the company.

In addition, the FTC charged the pair with creating an influencer program, which paid other prominent gaming celebrities to promote the site, without discussing the reimbursement they were receiving.

Game Over

Cassell and Martin settled the FTC’s complaint, resulting in a September 2017 consent order.

The proposed settlement forbids either of the pair, or their company, from misrepresenting that any endorser is an independent objective user of their service, and requires them to clearly and conspicuously disclose any connections they maintain with endorsers of their service.

The Takeaway

The FTC is paying increasing attention to the role of endorsers in online and social media advertising. It recently sent more than 20 warning letters to influencers and related brands to which it had previously sent “educational materials” in April of this year. The April letters instructed the recipients on how and when to properly disclose relationships within the endorsements; the more recent letters got specific, presenting examples of media posts that were raising the FTC’s eyebrows.

The FTC also recently updated “The FTC’s Endorsement Guides: What People Are Asking,” a publication that provides guidance for online influencers. It’s the first significant revision of the Guides since 2015, which makes it essential reading for any enterprise that wants to avoid negative attention for its online influencers and endorsers. The Guides and subsequent FAQ guidance impose specific and substantial obligations on both influencers and the agencies and brands that engage them to prevent consumer deception. At this point it is clear that brands, agencies and even individual influencers ignore this guidance at their own peril.