The FTC has approved two final orders settling charges against Sony and its advertising agency as it relates to claims Sony made about its PlayStation Vita (“PS Vita”), a handheld gaming console. In its complaint, the FTC alleged that Sony deceived its consumers through false advertisements of the PS Vita’s purported technological features that Sony termed as “game changing.” The FTC also charged that Sony’s advertising agency, Deutsch LA, knew or should have known that the advertisements it produced contained misleading claims about the console’s capabilities, and that the advertising company misled consumers by urging its employees to create awareness and excitement about the PS Vita on social media without disclosing that they were employees of Deutsch LA.
Sony began the $50 million advertising campaign in February 2012. The advertisements and endorsements over social media ultimately led consumers to purchase a product that did not do what Sony promised it would. For example, the advertisements said users of the PS Vita would “Never stop playing” and showed users enjoying the “remote play,” “cross save” and real-time 3G features. But the FTC says that despite the ads’ promises, consumers really couldn’t use the “remote play” feature, had to have two copies of the game to use the “cross save” feature, and there was no live or multiplayer features even if consumers brought the 3G version of the PS Vita.
Under the terms of the FTC’s order with Sony, Sony is prohibited from making misleading advertising claims about the features of its handheld gaming consoles going forward. Also, Sony is required to provide consumers who bough a PS Vita handheld gaming console before June 1, 2012 with either a $25 cash or credit refund, or a $50 merchandise vouchers for select Sony video games, and/or services. Likewise, under the FTC’s order with Deutsch LA, the advertising company is prohibited from making similar misrepresentations as Sony, and bars misrepresentations that an endorser of any game console product or video game product is an independent user or ordinary consumer of the product. It also requires the agency to disclose a material connection, where one exists, between any endorser of a game console product or video game product and Deutsch LA or other entity involved in the manufacture and marketing of the product.
While the FTC’s message to Sony regarding its false advertising of the PS Vita device is clear, this case is made more interesting by the fact that Sony’s advertiser, Deutsch LA, was involved in the settlement with the FTC. The FTC’s allegations against Deutsch LA were that it knew or should have known that the PS Vita could not perform the functions that Sony advertised it could. This means that advertising companies must do their own homework on a product and ensure that it can perform as the product maker says it can before creating ads about the product. Additionally, companies attempting to advertise via social media must be mindful of their requirement to disclose any involvement that the person advertising their product has with the company. As a result, advertising companies like Deutsch LA should take stock in the FTC’s recent settlement and make sure that they investigate any advertising claims a company wants them to make as it relates to a certain product, and must disclose any ties an individual advertiser has to the company.