Gamification Law and the FTC

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Originally posted on the Gamification Blog.

Many people are aware that in 2009, the FTC implemented guidelines that addressed the use of endorsements and testimonials by bloggers. The main stream press highlighted just the part of these guidelines that require disclosure by bloggers of compensation received for recommending a product or service. However, the guidelines include some lesser known provisions which apply more broadly to consumer generated media and relate to gamification.

  • The guidelines are not limited to bloggers, but cover any advertising message, including consumer-generated media, that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of the endorser. This includes consumer testimonials, such as reviews or recommendations endorsing a product or service on any social media site, not just blogs.
  • When a connection exists between the endorser and the seller of an advertised product that might materially affect the weight or credibility of the endorsement, such connection must be fully disclosed. In one example, the FTC says that if a blogger gets a free video game to evaluate and review, he must clearly and conspicuously disclose that he received the game for free. In another example, it states that if someone receives redeemable points each time they tell friends about a product, this fact needs to be clearly and conspicuously disclosed.
  • In these examples, the FTC also states that the company needs to advise the consumer giving the testimonial that this connection should be disclosed, and it should have procedures in place to try to monitor the consumer's postings for compliance.
  • Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers. Endorsers may also be liable.
  • Whenever an advertisement represents, directly or by implication, that the endorser is an expert with respect to the endorsement message, then the endorser's qualifications must in fact give the endorser the expertise that he or she is represented as possessing with respect to the endorsement. This raises potential gamification issues with leader boards, badges and expert status to the extent that this implies an "expert" status that the user does not actually posses.
This is just one of many examples of little known laws that relate to gamification. For more information on legal issues with gamification contact james.gatto@pillsburylaw.com. Jim, who is the head of Pillsbury's Social Media, Entertainment and Technology group, delivered a presentation on Managing Legal Risk in Gamification at the 2011 Gamification Summit. A copy of that presentation can be found at here.