Sony's PlayStation Vita may not have been so game-changing after all.
Sony settled with the Federal Trade Commission on Tuesday over charges that it deceived customers in 2011 about the "game changing" advanced technology on the handheld gaming console.
The move marks the first time the commission has taken action against a company for allegedly misleading advertisements posted on Twitter, the FTC said.
The commission also targeted ad agency Deutsch LA for its role in the campaign. Among the charges, the FTC accused Deutsch LA of promoting the gadget without disclosing that the agency was the source of the tweets, leaving the impression that they were genuine customer endorsements.
"As we enter the year's biggest shopping period, companies need to be reminded that if they make product promises to consumers -- as Sony did with the 'game changing' features of its PS Vita -- they must deliver on those pledges," Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a statement. "The FTC will not hesitate to act on behalf of consumers when companies or advertisers make false product claims."
One of Deutsch LA's assistant account executives sent a company-wide email asking staff members to help with the ad campaign by posting comments about the Vita on Twitter using the hashtag "#gamechanger," court documents show.
"To generate buzz around the launch of the device, the PS Vita ad campaign will incorporate a #GAMECHANGER hashtag into nearly all creative executions," one employee wrote. "[T]o get the conversation started, we're asking YOU to Tweet about the PlayStation Vita using the #GAMECHANGER hashtag."
As a result, Deutsch LA employees tweeted about the gaming console on their personal accounts, without noting their relationship to Deutsch or Sony, the FTC alleged. The commission contends the tweets were misleading because they did not reflect reviews posted by actual Vita users, and because the employees did not note that they worked for Deutsch LA.
"In the proposed order, Deutsch LA Inc. did not admit to any violation of the law and sought to resolve all open issues to avoid protracted legal proceedings," the company said in a statement.
Sony is banned from making similar advertising claims in the future as part of its settlement with the FTC. The Tokyo-based company agreed to give customers who purchased a Vita before June 1, 2012, a $25 cash or credit refund, or a $50 voucher for select video games and services, according to the FTC.
"Although we have a strong difference of opinion with the FTC as to the message that PS Vita purchasers took from that advertising, we decided to settle the FTC's inquiry in order to focus on the PlayStation 4's momentum into this holiday, where PlayStation Vita continues to play an important role," Sony said in a statement.
The company will email customers who are eligible for refunds after the settlement is finalized. Sony's Vita first sold in the U.S. in February 2012 for about $250.