Regulatory Developments, Vol.1, No.3

Warner Bros. Settles FTC Allegations Concerning Failure to Disclose Use of Online “Influencers” to Market Video Game

In the Matter of Warner Bros. Home Entertainment, Inc., No. 152 3034 (Order Entered July 11, 2016)

In marketing its Middle Earth: Shadow of Mordor video game, Warner Bros. used paid online “influencers” to post positive gameplay videos on social media sites. According to the Federal Trade Commission (FTC) complaint, the entertainment company failed to adequately disclose that the videos were sponsored content and that it had paid influencers thousands of dollars for their online posts. The settlement prohibits Warner Bros. from misrepresenting that any gameplay videos are independent opinions by impartial gamers and requires the company to clearly and conspicuously disclose its relationship with influencers. The order also specifies measures that Warner Bros. and any entities it hires to conduct an influencer campaign must take to ensure that future campaigns comply with the order, including “educating influencers regarding sponsorship disclosures, monitoring sponsored influencer videos for compliance, and, under certain circumstances, terminating or withholding payment from influencers or ad agencies for non-compliance.” This settlement is the second major enforcement action the FTC has brought in connection with native advertising and sponsored content. View the press release. Read our summary of the FTC settlement with Lord & Taylor in Issue 2.

Volkswagen Settles “Clean Diesel” Charges to the Tune of $14.7 Billion

FTC v. Volkswagen Group of America, Inc., No. 3:16-cv-1534 (N.D. Cal.)

In the highly publicized scandal concerning “defeat devices” on certain Volkswagen (VW) diesel vehicles, VW settled environmental charges brought by the United States and the state of California. It also settled charges with the FTC over the advertising campaign VW used to promote its supposedly “clean diesel” VWs and Audis; the FTC charged that the campaign falsely claimed the cars were low-emission and environmentally friendly, met emissions standards, and would maintain a high resale value. VW will be offering a buyback program to consumers, and under the FTC order, consumers will receive additional compensation from Volkswagen for the harm caused by VW’s deceptive advertising. View the decision.

FDA Declares Label “Evaporated Cane Juice” False and Misleading in New Guidance

In its long-awaited final guidance issued May 25, the Food and Drug Administration (FDA) advised against the use of the term “evaporated cane juice” on food labeling, recommending that the ingredient be listed as “sugar” instead. While the ingredient would commonly be understood to be sugar, the term “evaporated cane juice” is misleading as it is not “juice” within the meaning of the FDA’s regulations. Thus, “FDA would consider a juice product sweetened with an ingredient derived from sugar cane and labeled as 100% fruit juice to be misbranded” under the Federal Food, Drug, and Cosmetic Act, “because the ‘100% fruit juice’ claim is false and misleading in that the product contains a non-juice sweetener in addition to the juice.” The agency would not, however, object to “the addition of one or more truthful, non-misleading descriptors before the common or usual name ‘sugar,’” including the use of a “coined term” to distinguish the ingredient from “other sugars on the market.” View the guidance.