FTC Action Is A Warning to Companies That Promise In-Game Rewards in Advertising
On January 7, 2021, the FTC announced a proposed settlement with mobile advertising company Tapjoy, Inc. over the alleged failure to provide in-game rewards that were promised to users for completing advertising offers. This FTC action highlights the risk in promising in-game rewards advertising, even if the rewards are supposed to be given by a third-party game company.
As an advertising platform, Tapjoy acted as a middleman between advertisers, gamers, and game developers. Tapjoy displayed offers in apps that use its platform. When a user completes an offer—such as by signing up for a subscription or making a purchase—Tapjoy would credit the user’s account with in-game currency or some other reward, and the game developer would receive a percentage of the advertising revenue. However, according to the FTC complaint, many players would spend money, turn over sensitive data, or jump through other hoops only to find that they received nothing in return. The FTC also alleged that Tapjoy was aware of these problems and did not take adequate steps to address them or stop making deceptive claims. Instead, the company allegedly implemented policies to discourage consumers from complaining, such as prohibiting consumers from submitting a complaint within 24 hours of completing an offer.
As part of the proposed settlement, Tapjoy is prohibited from misrepresenting rewards it offers and the terms under which they are offered. Additionally, the company must clearly and conspicuously display the terms governing rewards and must specify that the third-party advertisers it works with determine if a reward should be issued. Tapjoy also will be required to monitor its advertisers to ensure they are following through on promised rewards, investigate complaints from consumers who say they did not receive their rewards, and discipline advertisers who deceive consumers.
This FTC complaint and proposed settlement represents a move by the FTC to bring greater scrutiny to the structure of mobile gaming, particularly gatekeepers such as app stores and advertising middlemen. Game companies and advertising partners should make sure to take steps to ensure that promises in advertisements are kept, even if that means ensuring third-party compliance.
See the FTC consent order here: FTC action serves as a warning to companies promising in-game rewards in advertising.