Ad agencies: If you want to say something nice, don’t not say anything at all (about your relationship with the company or product you are praising)

As we discussed previously, the Federal Trade Commission’s Endorsement Guides apply not only to bloggers who receive promotional merchandise, but also to contest promotions and corporate social media advertising. A recent FTC action confirms that advertising agency staffers cannot casually tweet nice things about their clients without disclosing their relationship. The FTC finalized a consent order with Sony Computer Entertainment America LLC (“Sony”) earlier this month regarding charges that it deceived consumers with false advertising claims about the “game changing” technological features of its PlayStation Vita handheld gaming console during its U.S. launch campaign in late 2011 and early 2012. The FTC’s complaint against Sony charges that some of the claims made by Sony regarding the PS Vita’s “cross platform gaming” or “cross-save” feature were misleading. As part of its settlement with the FTC, Sony is barred from making similarly misleading advertising claims in the future, and will provide consumers who bought a PS Vita gaming console before June 1, 2012, either a $25 cash or credit refund, or a $50 merchandise voucher for select video games and/or services. In a related complaint, the commission charged that Deutsch LA went beyond making the same knowingly misleading claims in ads on behalf of Sony, stating the ad agency also misled consumers by urging its employees to generate awareness and excitement about the PS Vita on Twitter, without instructing employees to disclose their connection to the advertising agency or Sony. According to the FTC’s complaint, approximately one month before the PS Vita was available for sale to the public, one of Deutsch LA’s assistant account executives sent the following email message to all the agency’s employees:

Fellow Deutschers –

The PlayStation Team has been working hard on a campaign to launch Sony’s all-new handheld gaming device, the PS Vita, and we want YOU to help us kick things off!

The PS Vita’s innovative features like 3G gaming, cross platform play and augmented reality will revolutionize the way people game. To generate buzz around the launch of the device, the PS Vita ad campaign will incorporate a #GAMECHANGER hashtag into nearly all creative executions. #GAMECHANGER will drive gamers to Twitter where they can learn more about the PS Vita and join in the conversation. The campaign starts on February 13th, and to get the conversation started, we’re asking YOU to Tweet about the PlayStation Vita using the #GAMECHANGER hashtag. Easy, right?

As a result of this email message, various Deutsch employees used their personal Twitter accounts to post positive comments about the PS Vita, including the following examples:

One thing can be said about PlayStation Vita…it’s a #gamechanger

PS Vita [ruling] the world. Learn about it! us.playstation.com/psvita/#GAMECHANGER

Thumbs UP #GAMECHANGER – check out the new PlayStation Vita

This is sick. …See the new PS Vita in action. The gaming #GameChanger

Got the chance to get my hands on a PS Vita and I’m amazed how great the graphics are. It’s definitely a #gamechanger!

The FTC asserted that by asking its employees to tweet about the product in this fashion, Deutsch LA had “represented, directly or indirectly, expressly or by implication, that these comments about the PS Vita were independent comments reflecting the views of ordinary consumers who had used the PS Vita.” Because the comments were created by employees of Deutsch LA, which was hired to promote the PS Vita, the comments were false and misleading and the failure to disclose the relationship, in light of the representation made, was a deceptive practice affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. Under a settlement order, Deutsch LA is barred from such conduct in the future. Companies and their advertising agencies must be cautious about engaging social media in the promotion of products or services without disclosing their employment or other pertinent relationship. This concern is likely to become an even larger issue with the growing prominence of anonymous social media services such as Yik Yak, Secret and Whisper.