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Are You in Good Standing with the FTC? on Game and Player

Are You in Good Standing with the FTC?

Michael Ubaldi  //  October 14, 2009

For a body with a mission, it's risky to let the market sort things out.


he trouble with a mission is that if it does not have clear terms of fulfillment, it simply persists. Guards guard, watchdogs watch, and shifts are not expected to be uneventful. Bodies appointed to independently preside are most strongly affected by a nervous imperative to do something, lest they be thought as having fallen slack. Enter the Federal Trade Commission, low-bidding contractor for the road to Hell.

In December, the FTC will revise its Guides Concerning the Use of Endorsements and Testimonials in Advertising. The eighty-one pages describing and defending the revision are Byzantine, an ironic characteristic of orders to chaperone and restrict speech. Consumers, daily offered products of disparate value, read a lot of hooey; the FTC's mission is "consumer protection"; and the FTC is resolved to, at its most succinct last year, "address the issues of advertiser and endorser liability and disclosure of material connections in various high-tech contexts."

Favorable product reviews shall be assumed the payment of a quid pro quo.Favorable product reviews, singularly those published outside of "a newspaper, magazine, or television or radio station" — a goodly portion of publishers, arguably including Game and Player — shall be assumed the payment of a quid pro quo. Unless a blogger or non-traditional publisher "clearly and conspicuously disclose[s]" receipt of, say, a demonstration copy free of charge, he could be liable for fines reaching five figures. As for the product developers — well, they are on notice to "advise" the reviewer "that this [material] connection should be disclosed," and "should have procedures in place to try to monitor his postings for compliance," or else they'll have to pay up, too.

After a full read of the commission's 16 CFR Part 255, it looks as though somebody serving on or related to the commission browses the web without an ad-blocker, and saw one too many of those brummagem spots for whiter teeth, fewer wrinkles, dramatic weight loss, or — see pages 77 and 78 — sleep apnea solutions resembling traction devices. The intent seems to be to combat potentially distortive advertisements by regulating commentary.

Among the demurrals raised by no fewer than seventeen advertising associations was this plain one: why have card-carrying journalists been exempt? The commission's circular argument: Because an "independent editorial responsibility" inheres in the newsroom, whether or not a product was obtained at zero cost "would not affect the weight consumers give to the reviewer's statements." Reporters can be trusted because — because they can be trusted. For a blogger or non-traditional publisher, meanwhile, "these facts might affect the weight consumers give to his review." Fancy that, when polls by Pew, Gallup, Rasmussen, et al. routinely find the prize adjective for media to be "bias."

I could sucker consumers, yet without any material receipt to disclose, remain compliant.To supplement its fractured reasoning, the FTC had a few hypothetical situations appended to its list of real-world illustrations, none of which satisfy objections, nor make it any more difficult to deceive consumers.

If, for example, there is no "relationship whatsoever between the speaker and the manufacturer," the commission rules out an endorsement. So tidy! But what if the unconnected author or publisher wishes to ingratiate himself with the product developers?

Twice, now, I have reviewed titles whose copies I purchased — Stormrise and Velvet Assassin — and whose critical panning threw my accolades into sharp relief. My work, swiftly discovered through search engines, was highlighted by a community manager for The Creative Assembly; and drew personal thanks from Claus Wohlgemuth of Replay Studios.

Both congratulations inspirited as much as they flattered — who doesn't enjoy an attaboy for perspicacity? — and I imagine a future request for review copies might not be as easily ignored. But now, what if I fished for that appreciation with inaccurate reviews? I could sucker consumers, yet without any material receipt to disclose, remain compliant with the FTC's regulations.

Dan Hsu was not answered by crickets when in 2005 he alleged that a competitor's "magazine cover stories are for sale."For all the commission's urges to play voyeur, the FTC can't account for sundry and political relationships between reviewers and product developers. Yes, be assured, it will scrutinize personal and professional histories, but only if something gratis goes unmentioned. A reviewer can disclose a free copy of Developer A's sports game and at the same time unfairly denigrate Developer B's competing title. Viva compliance!

With its distant, blurry read on an industry, the FTC sounds indifferent to the interest and ability of consumers — including bloggers and others in the crosshairs — to distinguish impassioned reviews, up or down, from drivel. Aggregation sites arrange dozens of review scores, including sources qualifying as non-traditional media, along a gamut — the bell curve and outliers made distinct, especially outliers.

Former Electronic Gaming Monthly editor-in-chief Dan Hsu was not answered by crickets when in 2005 he alleged that a competitor's "magazine cover stories are for sale." Never mind that the FTC, champion of consumers, would claim no jurisdiction. He was angry, Hsu wrote in the editorial. Why was he angry? "Because even though they're competitors, they affect my business and my reputation." Why were competitors, who stood to gain exponentially more than Joe Nobody by shilling, incensed at the indictment? Because it affected their business and their reputation.

But pleas for industry self-regulation conflict with the charge of consumer protection; it's risky to let the market sort things out. Associations "who expressed concerns about the future of these new media if the Guides were applied to them," states the commission, "did not submit any evidence supporting their concerns." As of December 2, when the revisions become enforceable, the FTC will likely be the obligated recipient of more concerning evidence than commissioners imagined.

Radical Dylan // October 14, 2009 // 7:46 PM

How bout a short summary right at the end, for those of us that don't understand anything of what was just said... and also for those that don't feel like reading it all...

Ed Kirchgessner // October 15, 2009 // 9:56 AM

I couldn't agree with you more, Mike: bloggers and non-traditional sites like G&P stand to lose the most at the hands of these rules. Exemptions for "journalists" are downright silly, and impossible to qualify in the internet age.

Gabe // October 15, 2009 // 12:56 PM

I don't understand. Has there been some outcry from consumers hoodwinked by insincere reviews? The skills one needs to discern between a writer who is on the take and one who isn't aren't new skills--we developed those back in the snake-oil days. We apply them every day to "real, official, name-brand" journalists and to that gent on the street who swears you just can't lose in this game of three-card monte. Lying and misleading customers will be unprofitable practices whether the FTC officially disapproves of them in an 81-page document or not.

Michael Ubaldi // October 15, 2009 // 2:15 PM

I was wondering the same thing, Gabe. According to the notice, there were no advocate groups lobbying the FTC for action. Revisions seem to be the fruit of "review," which, from my experience on an independent municipal board of my own, can sometimes motivate regulation in and of itself.

The plot thickens: yesterday, the FTC protested that, paraphrased, "bloggers who are paid per blog or tweet to market a product, for example, need to disclose that information." One problem: that's not what 16 CFR Part 255 says.

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