the past decade, social media has emerged as one of the world's most dominant
marketing tools for obvious reasons: it
is cost-effective, easily accessible, highly scalable and can dramatically
increase brand awareness across multiple outlets and platforms. Arguably, the most advantageous aspect of
social media marketing is the ability for companies — both large and small — to
directly engage with their consumers and target their specific interests.
way companies have recently been capitalizing on the benefits of deploying
marketing campaigns on social media is through the use and administration of
contests and sweepstakes. However,
running a social media contest or sweepstakes is not without risk. Not only must companies comply with both
state and federal sweepstakes laws as well as the social media platform's own
promotion rules, but as confirmed in a recent closing letter issued by theFederal Trade Commission to fashion brand Cole Haan, sweepstakes and contest
administrators must also ensure compliance with the implied endorsement
mandates of the Federal Trade Commission Act (the "FTC Act"). The FTC began its investigation into Cole
Haan after being alerted of a contest which the fashion brand had launched on
Pinterest to promote its footwear line.
The contest rules instructed participants to create Pinterest boards with
5 images from Cole Haan's Pinterest board (note: Pinterest revised its contest rules to
prohibit users from requiring a certain number of pins, or pinning from a
specific selection, as a requirement for contest entry), 5 images of the
participants' "favorite places to wander", and the hashtag
#WanderingSole as part of each pin description.
The contestant with the most creative board was eligible to win a $1,000
Cole Haan shopping spree. Based on the
unobvious "material connection" between the contestants and Cole
Haan, however, the FTC determined that requiring contestants to pin Cole Haan
products constituted an "endorsement" under Section 5 of the FTC Act,
necessitating a disclosure that contestants were incentivized to pin to win the
at protecting consumers from deceptive or unfair practices by advertisers,
Section 5 of the FTC Act, 15 U.S.C. §45, requires that "material
connections" between endorsers and advertisers be disclosed when the
nature of their relationship is not otherwise clear to the public. In the Cole Haan case, the FTC determined
that contest participants were financially incentivized to pin images of Cole
Haan products—as entry to a contest to win a significant prize—and the
"material connection" between the contestants and Cole Haan was not
reasonably apparent to viewers of the contestants' pins. Instead, the FTC determined that Cole Haan
should have instructed its contestants to label their pins and boards to make
clear that they were created as part of a contest. The FTC further found that Cole Haan's
requirement that contestants include the hashtag #WanderingSole was not enough
to alert viewers that the creators of the boards had pinned product images in
order to be considered for a prize.
the FTC declined any enforcement action against Cole Haan, noting that this was
the first time the agency had publicly addressed whether entry into a contest
was a form of material connection.
Additionally, the FTC noted Cole Haan's decision to adopt a social media
policy addressing FTC concerns in the wake of this incident.
this Means for You
the fact pattern presented before the FTC was limited to promotions on
Pinterest, the same statutory analysis used by the FTC and resulting
determination can easily be applied to similar promotions on other social media
services and platforms. To avoid running
afoul of the FTC Act, companies running or sponsoring online promotions should
clearly disclose the nature of the relationship between the contestants and the
company itself as a condition for entry.
In other words, if a brand's sweepstakes or contest requires entrants to
engage in any activity that may constitute an endorsement of the brand's
products or services (e.g., posting a video which directly or indirectly
promotes the brand or its related products or services) as a condition for
entry to such sweepstakes or contest, then the rules associated with the
promotion should also require that the post include a clear statement that it
was made in connection with the brand's promotion. For example, including the word
"contest" in the hashtag may suffice (e.g.,
#WanderingSoleContest). Prior to
launching any online sweepstakes or contest initiative, companies should also
do the following:
Carefully review the rules of the social media platform being used to promote the sweepstakes or contest involved. Promotion rules vary from platform to platform and are frequently amended by the platform providers, so be sure to regularly check for updates.
Ensure that an enforceable, up-to-date social media policy is in place.
Know the differences between "contests" and "sweepstakes" and ensure that the exploitation of the promotion is fully compliant with state and federal law.
Ensure that all rules for the promotion are clearly posted and include all required legal disclosures.
Take reasonable steps to monitor social media campaigns to ensure compliance.
DigitalHHR team continues to monitor the latest developments surrounding online
promotions and social media marketing campaigns. If you have any questions, please feel free
to reach out to us.