Fake reviews for Xbox One get company in trouble with feds

Via Moak: Fake Xbox One reviews get company in trouble, on clarionledger.com, 9/3/2015

Back in late 2013, Microsoft’s Xbox One was the focus of the attention of much of the gaming world. Microsoft laid out millions to promote demand for the new console, and it was hugely successful; more than a million units had been sold within the first 24 hours of availability. With a year, that number had risen to 10 million worldwide.

But at least some of the reviews which helped to create all that demand were apparently bogus. This week, the Federal Trade Commission accused a company called Machinima of paying cash to “influencers” to post YouTube videos endorsing the new system, but not requiring them to disclose they had been paid for their supposedly-objective reviews.

Why is this a big deal? Because increasingly, people are going online to research products and services before they buy. Most savvy customers will ignore the company’s own promotions, knowing that they’re not objective; instead, they seek unbiased opinions from independent sources they believe to be able to offer an honest opinion.

“When people see a product touted online, they have a right to know whether they’re looking at an authentic opinion or a paid marketing pitch,” said Jessica Rich, Director of the Bureau of Consumer Protection. “That’s true whether the endorsement appears in a video or any other media.”

The FTC has proposed a settlement with Machinima, in which it must clearly disclose when they’ve been compensated.

“Machinima and its influencers were part of an Xbox One marketing campaign managed by Microsoft’s advertising agency, Starcom MediaVest Group,” reported the FTC in a release. “Machinima guaranteed Starcom that the influencer videos would be viewed at least 19 million times.”

Machinima reviewers were allegedly given pre-release versions of the console and software, along with lucrative payments. Two endorsers reportedly got checks for $15,000 and $30,000 after they promised to produce YouTube videos that would reach 250,000 and 730,000 views, respectively. A larger group of influencers were promised up to $25,000. None of the reviewers were required to disclose they were being paid.

The case points to an important consideration in today’s marketplace: the line between advertising and objective content can be easily blurred, and consumers should exercise caution in believing any testimonials they hear. Just because something appears to be objective, doesn’t mean it is.

Of course, there’s nothing wrong with paying someone to talk about your company’s product, but it must be clearly stated that the endorser has been compensated. If something is clearly stated to be a promotion — for which the endorser has been paid — that’s a lot different from someone taking money, then failing to disclose that fact. Some sites — like Consumer Reports — take no advertising in an attempt to be as objective as possible. Other sites are generally held to be unbiased, although they do take advertising. Before basing a buying decision – especially a major one — on what you perceive to be unbiased information, it’s a good idea to dig a little deeper.  Asking your network of friends and contacts for recommendations is a good place to start, and it’s also a good idea to weigh reviews from several different sources.

In an age when anybody can research anything online, and anybody can make an endorsement, there is a lot of money to be made in convincing people to spend their money. For consumers, it’s buyer beware.

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