The FTC on paying YouTubers to endorse games

Major companies paying YouTubers to promote their video games doesn't run afoul of the Federal Trade Commissions guidelines, and even if it did, it's unlikely a content creator would be fined, an FTC spokesperson tells Polygon.

"The guides are guidance to help advertisers and endorsers comply with federal advertising law," said Betsy Lordan, with the FTC Office of Public Affairs. "They are not legally enforceable, and there are no monetary penalties or penalties of any kind associated with them."

Earlier this week, news hit that Microsoft and Electronic Arts were paying YouTubers to create videos to promote their games. Under the separate programs, the content creators were asked to disclose that relationship.

That's likely because of the 2009 revised guides released by the FTC for endorsements and advertising. According to those guides, paid endorsements are fine as long as the fact that a endorser is being paid is "clearly and conspicuously" disclosed. Lordan declined to comment on whether the disclosure in these cases met that requirement.

The guides were first written in 1980 to help advertisers understand the principle that if an ad features an endorser who's a relative or employee of the marketer — or if an endorser has been paid or given something of value to tout the marketer's product — the ad is misleading unless the connection is made clear, Lordan said. Knowing about the connection is important information for anyone evaluating the endorsement, she said.

In 2009, the FTC revised the guides to address the rise of social media.

"The legal principles haven't changed, but the FTC revised the examples to show how these standards apply in today's marketing world," Lordan said.

"The ultimate charge would be a violation of the FTC Act."

But the guides are just that, guides. They aren't laws, so they are not legally enforceable.

What they are is a set of guidelines meant to boil down the dense language of U.S. federal advertising laws. It's also worth noting that because these laws deals with communication on behalf of an advertiser, that communication is considered commercial and not protected speech.

And this is where things get a little interesting. While violating the guides won't lead to sanctions, the guides were written as a sort of warning sign to prevent people from breaking the law. So ignoring the guidelines could put a company on the road toward breaking the law, and some serious repercussions.

This is how Lordan explained it:

"So (for example) if an advertiser is not following these guidelines, there is no penalty. But the FTC could send a warning letter and if the problem is not eventually resolved, the agency could opt to open an investigation. But the ultimate charge (if the FTC decides to follow through) would be a violation of the FTC Act (violation of federal advertising law) and not a violation of the Guides. (It is not technically possible to violate the Guides because unlike regulations, the Guides are not legally enforceable.)"

And it's highly unlikely that the FTC would launch an investigation into a single YouTuber, rather they would investigate the company paying that person.

We reached out to Activision, Electronic Arts, Microsoft, Nintendo and Sony to ask them if they used or planned to still use endorsed YouTube videos to promote their games and if they had any plans to review the practice in light of the week's news and the reaction to it.

Sony and Activision did not respond. A Nintendo representative said that the company does not disclose or comment on its business practices.

"Microsoft was not aware of the terms and requirements that Machinima has in place with its content providers."

Electronic Arts, which requires full discloser under its Ronku program, referred us to the statement they released earlier this week:

"Through EA's Ronku program, some fans are compensated for the YouTube videos they create and share about our games. The program requires that participants comply with FTC guidelines and identify when content is sponsored. User-generated videos are a valuable and unique aspect of how gamers share their experiences playing the games they love, and one that EA supports."

Specifically, the spokesman pointed out that under the terms and conditions of the program, each video must comply with the FTC's guidelines.

Microsoft, which paid Machinima to promote their games, noted that the decision to use YouTube creators for the program wasn't their's.

"As part of this campaign, Microsoft advertising dollars on Machinima were specifically for banner and pre-roll media placements," according to the Microsoft spokesperson. "The additional video content creation was provided by Machinima as a value-add program. Microsoft was not aware of the terms and requirements that Machinima has in place with its content providers.

"Our overall media plan spans a diverse set of channels and Machinima is one of many media partners we work with to reach our audience. It is important to Microsoft that all of our partners follow necessary guidelines and any videos as part of paid programs should carry the appropriate disclosures."

Like EA, Microsoft declined to say whether they were reexamining the use of endorsed YouTube videos for marketing their games.

The FTC isn't conducting any research into the use of their guidelines for endorsements, Lordan said. She declined to say if the FTC had any active investigations into game publishers over breach of the federal advertising law. Under FTC rules, the commission does not confirm investigations until they are complete and then, only if there are wrongdoings found.