Last week the U.S. Federal Trade Commission announced a settlement with Reverb Communications, a firm that describes its business as a:

… full service videogame agency that provides public relations, marketing, and sales services through one integrated campaign to the interactive entertainment and music industry.  Using precise messaging and calculated marketing campaigns, we are able to drive consumer and industry demand for our clients’ products, resulting in increased product sales.

According to the FTC’s complaint, some of the “precise messaging” involved the firm putting in fake positive user reviews of various video games on the iTunes store.

I haven’t been able to track down Reverb’s answer to the charges except a statement repeated here, a blog entry that reports some additional details of how the FTC got onto Reverb’s trail.  Reverb is said to have said:

During discussions with the FTC, it became apparent that we would never agree on the facts of the situation. Rather than continuing to spend time and money arguing, and laying off employees to fight what we believed was a frivolous matter, we settled this case and ended the discussion because as the FTC states: “The consent agreement is for settlement purposes only and does not constitute admission by the respondents of a law violation.”

That sounds like a non-denial denial, and the FTC appears to be doing good work here.  In the fall of ’09 it announced that paid commercial endorsements had to be disclosed — even on Twitter, Facebook, and in blogs.  There was some handwringing over this — would the government be going after any blogger who says something good about something and might have a financial interest in it?  It is not particularly easy to predict, especially since the FTC, unlike other Federal agencies, does not do formal rulemakings — it can only announce guidelines and then bring one enforcement action at a time under its general charter to combat unfair or deceptive trade practices.

The Reverb case provides a good example of how the FTC is thinking about applying its limited staff power: to professional organizations working to subvert ratings schemes.  That’s a good place to start; if nascent ratings schemes are to work, it’s helpful to know what the boundaries are — especially to PR and marketing firms that don’t want to have to race to the bottom.  Now they can tell their clients that they’re just not able to help out with fake reviews.  (In the meantime, the Reverb main home page is showing a generic parked message — odd.)

I remain curious how effective sites like subvertandprofit.com are.  S&P says it:

… runs social media campaigns across a variety of social media sites, via our 25,000 users who earn money by viewing, voting, fanning, rating, or posting assigned tasks. Since 2007, our user actions have effectively promoted our advertisers’ web content to popularity at significant cost savings. In 2010, Subvert and Profit merged with Crowdsource Corp. to extend the power of crowdsourcing to a variety of social and business applications.

More directly, S&P tells advertisers that they can:

Buy votes on social media sites.

1. Sign up.
2. Add funds to your account.
3. Buy votes.
4. Get visitors to your site for cheap.
5. Repeat.

And in turn, social media users can “get paid just for clicking buttons.”

Perhaps they or other intermediaries that help to launder ratings could find themselves answering some questions from the FTC.  I see the domain for subvertandprofit is registered in Massachusetts, so I’ve sent an email to its owner — I’ll update this post if I hear anything.