Contest Entrants` Pins Raise FTC Endorsement Concerns

MAY 2014
ADVERTISING, MARKETING
& PROMOTIONS
>> ALERT
CONTEST ENTRANTS’ PINS RAISE
FTC ENDORSEMENT CONCERNS
The Federal Trade Commission (FTC) recently investigated whether Cole Haan, Inc. violated
Section 5 of the FTC Act when it required entrants in its Pinterest contest to pin images of
Cole Haan products in order to enter the contest.
According to the FTC, entrants’ pins
featuring Cole Haan products were
endorsements of the company’s
products and the fact that entrants
received an entry into the contest in
order to win a $1,000 shopping spree
was a material connection that needed
to be disclosed in accordance with the
FTC Guides Concerning the Use of
Endorsements and Testimonials (FTC
Endorsement Guides). Under the FTC
Endorsement Guides, endorsers must
disclose any material connections with
the advertiser that viewers of the
endorsement would not reasonably
expect.
PINTEREST CONTEST
To enter the Cole Haan Pinterest
contest, entrants were required to
create boards entitled “Wandering
Sole” and pin five shoe images from
Cole Haan’s Wandering Sole Pinterest
Board, as well as five images of the
entrant’s “favorite places to wander”.
Entrants were also instructed to include
the hashtag #WanderingSole in each
pin description. The entrant with the
most creative entry would win a $1,000
shopping spree.
THE BOTTOM LINE
The FTC’s guidance makes it clear that that pinning may constitute an endorsement of a
company or its products, and entry into a sweepstakes or contest may constitute a
material connection that is required to be disclosed under the FTC Endorsement Guides.
Before running any social media promotion, companies should check the social media
platform’s terms and conditions, and should ensure their bloggers, influencers,
spokespeople, and even promotion entrants are disclosing their material connections
and institute reasonable monitoring programs to ensure compliance.
THE FTC’S DECISION
The FTC determined that entrants’
pins featuring Cole Haan images were
endorsements of the Cole Haan
products. Notably, the FTC found the
pins to be endorsements even though
the entrants were not required to state
anything about the products.
The FTC further explained that an entry
into a contest to receive a significant
prize in exchange for endorsing a
product constitutes a material
connection that would not reasonably
be expected by viewers of the
endorsement. As such, the fact that
entrants pinned Cole Haan products
in return for the opportunity to win a
$1,000 shopping spree was a material
connection that should have been
disclosed under the FTC Endorsement
Guides.
The FTC was also concerned that Cole
Haan failed to instruct entrants to label
their pins to make clear that they had
pinned the products as part of a
contest. While Cole Haan required
entrants to include the hashtag
#WanderingSole in their pins, the FTC
found that the #WanderingSole hashtag
did not adequately communicate the
material connection between entrants
and Cole Haan.
Fortunately for Cole Haan, after
considering a number of factors, the
FTC issued a closing letter declining
to pursue enforcement action against
the company. In explaining why it
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Attorney Advertising
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MAY 2014
ADVERTISING, MARKETING & PROMOTIONS
>> ALERT
declined formal action, the FTC noted
that this was the first time it had
publicly addressed whether a contest
entry was a material connection that
needed to be disclosed and whether
a pin on Pinterest could constitute an
endorsement. The FTC also noted that
the Cole Haan contest ran for only a
limited length of time and that it drew a
relatively small number of contestants
and that Cole Haan had subsequently
adopted a social media policy
addressing the FTC’s concerns. The
FTC concluded by stating that it expects
Cole Haan to take reasonable steps
to monitor its social media influencers’
compliance going forward.
but rather give entrants flexibility to pin
whatever images they want to pin in
order to enter the promotion (although
companies must be careful if they
decide to use those images after the
promotion, since there may be third
party intellectual property issues with
the images). While the FTC’s letter
addressed only pins on Pinterest, the
FTC may take the same position with
respect to promotions that require
entrants to post images or videos of,
or make favorable comments about,
a company and/or its products on
other social media platforms, such
as YouTube, Facebook, Twitter, and
Instagram.
While the FTC chose not to pursue
action against Cole Haan at this
time, the next company that runs
a promotion in violation of the FTC
Endorsement Guides may be subjected
to enforcement now that the FTC has
put the industry on notice as to what
constitutes an endorsement and a
material connection in connection with
a social media promotion. Accordingly,
companies should closely scrutinize
whether their Pinterest and other social
media promotions raise endorsement
issues to ensure these promotions
are in compliance with the FTC
Endorsement Guides.
Second, entry into a sweepstakes or
contest may constitute a material
connection that is required to be
disclosed under the FTC Endorsement
Guides. As such, if companies want
entrants to pin or post the company’s
images in order to enter a sweepstakes
or contest, companies should instruct
entrants to disclose their material
connections. While the FTC did not find
Cole Haan’s #WanderingSole hashtag
to constitute an adequate disclosure,
hashtags such as #sweepstakes or
#contest should effectively disclose
the material connection.
WHAT DOES THIS MEAN?
First, the FTC’s guidance makes clear
that that pinning may constitute an
endorsement of a company or its
products. As such, if companies
want to avoid endorsements in their
promotions, they should not require
entrants to pin only images of the
company’s products to their boards,
Third, before running any social media
promotion, companies should check
the social media platform’s terms
and conditions, including Pinterest’s
Acceptable Use Policy. Pinterest’s
Acceptable Use Policy prohibits
promotions that require entrants to
pin from a selection of images, and
Pinterest has begun to crack down
on promotions that run afoul of its
Acceptable Use Policy. Notably, failure
to comply with a social media platform’s
terms may result in the platform
terminating a company’s promotion at
any time without notice.
Last, the FTC is once again closely
scrutinizing endorsements. The FTC’s
closing letter came only a few weeks
after the FTC announced its settlement
with the home security company ADT
regarding claims that ADT’s endorsers
failed to disclose their material
connections and misrepresented
themselves as independent reviewers
on television programs and in social
media (read our previous Alert on the
settlement here). The settlement is a
further reminder that companies should
ensure their bloggers, influencers,
spokespeople, and even promotion
entrants are disclosing their material
connections and institute reasonable
monitoring programs to ensure
compliance.
FOR MORE INFORMATION
Allison Fitzpatrick
Partner
212.468.4866
afitzpatrick@dglaw.com
Joseph J. Lewczak
Partner
212.468.4909
jlewczak@dglaw.com
Matthew E. Smith
Associate
212.468.4804
msmith@dglaw.com
or the D&G attorney with whom you
have regular contact.
Davis & Gilbert LLP
T: 212.468.4800
1740 Broadway, New York, NY 10019
www.dglaw.com
© 2014 Davis & Gilbert LLP