Reverb Communications has helped market games like "Fairytale Fights" starring porn legend Ron Jeremy, a Beer Bong iPhone app, and "Rock Band AC/DC." But promoting sex, drugs, and rock 'n' roll isn’t what got the company into hot water with the Federal Trade Commission. It's the phony gaming app reviews the firm posted in the Apple iTunes store that did.
The FTC alleges that Reverb, a PR and marketing agency serving videogame publishers, posted positive reviews of games without disclosing that they were being paid to promote the games. "Amazing new game," noted one of the false reviews. "GREAT,family-friendly board game app," gushed another, according to an FTC document. Reverb staffers also gave clients' gaming apps four and five star ratings, according to the FTC.
The agency alleges that between November 2008 and May 2009, Reverb employees, including founder Tracie Snitker, posted reviews about clients' games on iTunes.
"During discussions with the FTC, it became apparent that we would never agree on the facts of the situation," said Snitker, also VP public relations at Reverb, in a statement e-mailed to ClickZ News. "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.' "
In a document related to the case, the commission stated, "In truth and in fact, the reviews for those gaming applications were not independent reviews reflecting the views of ordinary consumers. The reviews were created by employees of Reverb, a company hired to promote the gaming applications and often paid a percentage of the applications' sales." Failure to disclose its connection to the gaming publishers is a deceptive practice, according to the FTC.
Phony reviews and endorsements are nothing new, and the Web and social media tools make them even more simple to disseminate. Recognizing the new formats for deception enabled by blogs, social networks, and other social channels, the FTC unveiled voluntary guidelines for endorsements made through blog posts or in other social media environments last year. The guidelines call for endorsements to disclose any "material connections" between advertiser and endorser, including direct payments and free samples of the product being discussed. In the case of Reverb, the guidelines call for posts to include a disclaimer if "the speaker is compensated by the advertiser or its agent.”
Reverb, however, as the FTC claims, was in violation of section five of the FTC Act, not the endorsement guidelines. Those guidelines "don’t have the force of law," according to Stacey Ferguson, staff attorney for the FTC's Division of Advertising Practices, part of the agency's Bureau of Consumer Protection. The guidelines inform the FTC when taking such actions against companies, however. "Those guidelines help businesses interpret how to comply," said Ferguson.
"[T]he Commission believes that the endorser is the party primarily responsible for disclosing material connections with the advertiser," note the FTC guidelines. "However, advertisers who sponsor these endorsers (either by providing free products - directly or through a middleman - or otherwise) in order to generate positive word of mouth and spur sales should establish procedures to advise endorsers that they should make the necessary disclosures and to monitor the conduct of those endorsers." The commission did not disclose the names of any Reverb clients or game titles associated with the alleged false reviews.
The Reverb website lists games including EA’s Rock Band AC/DC, a Beer Bong iPhone app, and Playlogic Entertainment's "Fairytale Fights Magic Mirror," a fairytale inspired game featuring porn actors Ron Jeremy and Krissy Lynn, among the games it "has worked on."
According to Ferguson, the FTC learned of the alleged phony reviews through media reports, but could provide no further information. She said the commission obtained documentation confirming the reviews were indeed false, and said she could not reveal what type of documents were provided to prove that. "Evidence varies from case to case," she said.
In addition to refraining from posting without disclosure in the future, Reverb must "take all reasonable steps to remove any product review or endorsement, currently viewable by the public" that is not in compliance with the disclosure rules, within seven days, according to its agreement with the FTC. The company also must notify "current and future employees, agents, and representatives having responsibilities with respect to the subject matter," and obtain a signed statement acknowledge receipt.
UPDATE This story was updated to include Tracie Snitker's statement.
Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.
June 5, 2013
1:00pm ET / 10:00am PT