Last Thursday (Aug. 26), the Federal Trade Commission (FTC) announced that Reverb Communications had settled charges alleging that the public relations firm had engaged in deceptive advertising practices by having its employees write and post positive reviews of clients’ games in the Apple iTunes Store, without disclosing that they had been compensated to do so.
The settlement brings to a close the Commission’s first case under its revised “Guidelines on the Use of Endorsements and Testimonials in Advertising,” which took effect Dec. 1, 2009.
Those guidelines state, in part, that advertisers (in this case Reverb) are subject to liability for failing to disclose material connections between themselves and their endorsers. In a section entitled, “Disclosure of Material Connections,” the guidelines state that:
“When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.”
It seems pretty clear that Reverb’s actions violate the spirit, if not the letter, of these guidelines. An ordinary consumer who read a review written by a Reverb employee would, in all likelihood, believe that the review had been written by an ordinary consumer, not a paid advocate.
By way of example, ask yourself which one of these two product reviews might lead you to conduct a little more research:
•“I just bought Roller Coaster Tycoon, and I highly recommend it. The game is addicting and the graphics are awesome.”
•“I just bought Roller Coaster Tycoon, and I highly recommend it. The game is addicting and the graphics are awesome. (PAID ENDORSER.)”
Reverb, however, seemed to disagree.
“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,” Reverb executive Tracie Snitker was quoted as saying in The New York Times. Snitker hastened to add that the settlement did not involve any admission of lawbreaking.
But whether or not there was an “admission of lawbreaking” misses the point entirely. Legal or not (and that still seems to be something that could be debated), Reverb’s actions were unethical.
The PRSA Code of Ethics, to which all PRSA members pledge, calls for truthful, accurate and transparent communications. What could possibly be truthful, accurate or transparent about posting positive reviews of a client’s product, without disclosing that you’ve been paid to do so?
PRSA addressed this issue specifically in a Professional Standards Advisory — a periodic update to the PRSA Code, based on evolving technology and changing social and professional mores — that was issued in October 2008. The advisory states that:
“Misrepresentation by organizations and individuals using blogs, viral marketing, and anonymous Internet postings with undisclosed sponsorships and/or deceptive or misleading identities or descriptions of goals, causes, tactics, sponsors or participants,” is improper under the PRSA Code of Ethics. The advisory also reminds practitioners that “open communication is essential for informed decision-making in a democratic society.”
The FTC seems to agree. Stacey Ferguson, a lawyer for the FTC, was quoted in The New York Times as saying, “We hope that this case will show advertisers that they have to be transparent in their practices and help guide other ad agencies.”
The same ethics that apply to off-line communications also must be applied to social media conversations and other forms of online communications. Consumers have a right to know that the information they read online is accurate and truthful. They also have a right to know if a product “reviewer” has been paid to offer a positive opinion of a product or service.
Illegal or not, it’s the ethical thing to do.