First Settlement Under FTC's Endorsement Guides

In its first announced enforcement action arising out last year's revised Guides Concerning the Use of Endorsements and Testimonials in Advertising, the FTC has agreed to settle a case brought against Reverb Communications, a P.R. agency. The case arose out of allegations that Reverb employees posted positive reviews on Apple's iTunes store of videogames developed by Reverb's clients and sold via iTunes, without disclosing that the reviews were on behalf of paid clients. (The FTC had previously warned Ann Taylor about a possible Guides violation, but took no enforcement action.)

As described in the FTC's release about the settlement, published on August 26, 2010:

Reverb is a company that provides public relations, marketing, and sales services to developers of video game applications, including mobile gaming apps. Between November 2008 and May 2009, Reverb and Snitker posted reviews about their clients' games at the iTunes store using account names that gave readers the impression the reviews were written by disinterested consumers, according to the FTC complaint. Reverb and Snitker did not disclose that they were hired to promote the games and that they often received a percentage of the sales. These facts would have been relevant to consumers who were evaluating the endorsement and deciding whether to buy the gaming applications, the FTC complaint alleged.

Although the Guides only went into effect in December 2009 after--these reviews were posted--we have previously discussed that the Guides are not law or regulation, but rather indications of how the FTC intends to enforce existing consumer protection laws. This case demonstrates that point quite clearly.

The two Webinars about the Guides are available for free download here and here. If you have any questions about the FTC Guides or how they may impact you, please contact the attorneys of our Interactive Marketing practice.

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