US Government Settles with Network that Secretly Paid YouTubers to Shill Xboxes

The FTC says you can't plug a brand without disclosure, even on YouTube.

Sep 2 2015, 4:51pm

Image: Machinima

The Federal Trade Commision today proposed a settlement with Machinima, a video network that in 2013 paid gaming YouTubers to promote Xbox products without disclosing they were being paid to do so.

The settlement prohibits Machinima from similar deceptive conduct in the future, and the company is required to ensure its "influencers" clearly disclose when they have been compensated in exchange for their endorsements.

Basically, it sounds like Machinima got off with a warning. If Machinima fails to disclose such endorsements in the future, it will have to pay a penalty of up to $16,000 for every offense.

As the press release from the FTC explains, Machinima paid YouTubers between $15,000 and $30,000 to make videos that reached 250,000 and 730,000 viewers respectively. Another deal paid YouTubers $1 for every 1,000 views for a total of $25,000.

The FTC's complaint against Machinima reveals just how specific the instructions it gave YouTubers for making these video were.

For example, YouTubers were instructed to discuss two to three talking points detailing features they liked about the Xbox One, create a two minute video showcasing Microsoft in a positive light, and announce that they'll be playing Ryse: Son of Rome, an Xbox One exclusive game that was critically panned when it released.

Image: FTC

The FTC said that while Microsoft was responsible for the YouTubers' failure to disclose their connection to the company, the FTC found that these appeared to be "isolated incidents that occurred in spite of, and not in the absence of, policies and procedures designed to prevent such lapses."

According to the FTC, Microsoft also quickly required Machinima to remedy the situation after it learned that Machinima was paying YouTubers without making the necessary disclosures.

Turns out that you can't blatantly shill without disclosing, even on YouTube.