Sony is set to reimburse customers who bought its PlayStation Vita after complaints that a TV advert for the handheld console made false claims.
In addition to overstating the device's ability to link up to the PlayStation 3, staff at the firm's ad agency are also accused of using their personal Twitter accounts to mislead the public.
To qualify for the pay-out, users must live in the US and have bought a Vita before 1 June 2012.
Sony plans to email them later.
The action is the result of a settlement with the US Federal Trade Commission (FTC).
Those affected should be able to choose either a $25 (£16) cash or credit refund, or a $50 voucher, which can be spent on a selection of video games or other services.
The announcement coincides with the firm's decision to pull a more recent advert for the Vita after criticism that it was offensive.
The earlier 50 second Vita advert focused on Sony's claim that the machine would "revolutionise gaming" by offering "cross platform play" and "remote play".
Sony's ad showed video game Killzone 3 providing a feature that it lacked
The ad said the cross platform facility allowed users to start a title on the larger PS3, pause it and "pick up right where you left off" on the handheld. It also said it allowed them to take part in a two-person multiplayer game in which each player would use a different one of the two devices.
It added that the remote play option allowed consumers to "tap into" the PS3 to let them play one of its titles via the Vita while "on the go", providing access to more complex games than the Vita would otherwise be able to run.
However, the FTC took issue with these claims, saying:
- The cross platform feature was only available to a few games, and not all of them as implied
- When cross platform was offered it was more limited than shown. For instance in the baseball game MLB 12: The Show, the option could only be triggered after finishing an entire nine-inning game, rather than mid-action as the ad depicted
- The ad failed to make clear that to make use of cross platform, the user needed to buy two versions of the same game
- Multiplayer gaming using both devices together was in fact impossible
- The remote play facility only worked with some games, and the one used to show off the facility - Killzone 3 - was not among them. In fact, "very few, if any" PS3 games of similar size and complexity could be played on the Vita
The same complaints were also directed against Deutsch LA, the company that created the advert.
In addition, the regulator said it was unhappy that Deutsch sent a company-wide email to its staff asking them to post positive comments on Twitter using the hashtag #gamechanger.
"The tweets were misleading, as they did not reflect the views of actual consumers who had used the PS Vita, and because they did not disclose that they were written by employees of Deutsch LA," said the FTC, adding that the firm was barred from such conduct in the future.
Sony is keen to promote the Vita's ability to link up to the PS3 and PS4 to help it convince gamers they need the device in addition to a smartphone
The regulator said its provisional agreement with the two firms was subject to a public consultation that would run until 29 December.
Deutsch could not be reached for comment while a spokesman for Sony was unable to provide more information.
Sony has found itself embroiled in the fallout from another Vita advert released this month.
The online video features a glamorous female doctor making a series of comments that imply she is talking about masturbation, before revealing she is in fact referring to the handheld console.
It provoked criticism that the clip was "over sexualized" and pandered "to the sleaziest urges of teenage boys".
Sony's most recent advert was produced by a local European office
The clip was created by Sony PlayStation's local Belgium-Luxembourg office, which posted it to its own YouTube account.
The BBC understands that PlayStation's head office was not aware of the clip until it was made live and subsequently demanded it be taken offline after agreeing it was inappropriate.