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Machinima settles with FTC over undisclosed payments to online 'influencers'

The network reportedly compensated YouTubers for feature Microsoft's Xbox in their videos

Back in January of 2014 reports surfaced that the video network Machinima was paying YouTubers to include footage of the Xbox in their reviews and commentary. As part of the deal, video creators were allegedly told not to reveal the payments, positioning the footage as independent opinions. Today Machinima reached a settlement with the Federal Trade Commision prohibiting it from "misrepresenting that paid endorsers in influencer campaigns are independent reviewers."

The FTC has long worked to ensure that paid endorsement appearing in traditional media like television, newspapers, and magazines were properly disclosed to the public. But the lines have blurred in the age of the internet, which has enabled almost anyone to publish content directly to the public through blogs, social media accounts, and video platforms. The agency updated it's guidelines in 2015, a move interpreted by many in the world on online marketing as the beginning of a crackdown on the relative wild west of online influencers.

The FTC has also made recent moves to police "native advertising," a new breed of marketing designed to blend in with traditional journalism. Two days ago it filed a complaint against Lord and Taylor charging them with three separate violations:

1) that Lord & Taylor falsely represented that the 50 Instagram images and captions reflected the independent statements of impartial fashion influencers, when they really were part of a Lord & Taylor ad campaign to promote sales of its new line; 2) that Lord & Taylor failed to disclose that the influencers were the company’s paid endorsers – a connection that would have been material to consumers; and 3) that Lord & Taylor falsely represented that the Nylon article and Instagram post reflected Nylon’s independent opinion about the Design Lab line, when they were really paid ads.

As consumers increasingly turn to ad blockers, brands and the media companies are blurring the boundaries of advertising and independent content. Add in teenagers with little business experience and millions of passionate followers on platforms like YouTube, Instagram, and Snapchat, and you have a recipe for unscrupulous advertising that the FTC is clearly working hard to bring under control.