Are you considering running a promotional contest for your business through a social media platform? Excellent! What fun! Who doesn’t love a contest? You’ll just want to be sure the contest doesn’t cause your business more trouble than it’s worth. And, really, it shouldn’t – as long as you play by the rules.
In addition to the rules of whichever social media platform* you are using, the Federal Trade Commission (that’s “FTC” in government-initialism-speak) has specific online marketing rules that (it has recently confirmed) apply to social media contests.
In its recent letter to high-end shoe retailer Cole Haan, the FTC described how its online marketing rules apply to contests conducted by businesses through social media. Lucky for us – and thanks to Cole Haan for sticking its neck out first – we now have a road-map for compliance with the FTC Act in creating online contests.
Just a Wandering Sole . . .
In a contest called “WanderingSole,” Cole Haan asked people to create Pinterest boards using images of Cole Haan shoes along with pictures of their “favorite places to wander.” The most creative entry got a $1,000 shopping spree. Sounds like a great promotion with a meaningful prize and a chance to see interesting photos taken around the globe. Until our pals in the government got involved . . .
According to the FTC, the Pinterest boards constituted an endorsement of Cole Haan’s products. What’s wrong with that? Nothing. The problem lay in the fact that the incentive for contestants to provide these endorsements was not solely that they loved the shoes and wanted the whole world to know it – rather, (it could be argued that) the chance to win a $1,000 shopping spree had something to do with the contestants’ willingness to take pictures of their shoes in exotic places.
And even the financial incentive to take foot fotos would not have gotten the FTC’s interest but for the fact that, without some sort of disclosure, those who saw the contestant-created Pinterest boards might not have reasonably expected that there was such a financial connection. In other words, those viewing the endorsements may just have thought, “Gee, these people really love Cole Haan shoes. And they GO places with them. Hmmm . . . I wonder if I’ll go places if I wear Cole Haan shoes?” . . . or something like that. Cole Haan had required contestants to use the #WanderingSole hashtag, but the FTC found that this did not amount to an effective disclosure of the material connection between Cole Haan and the contestant. *shrug* It was worth a shot.
In any event, the FTC’s problem with the contest was that Cole Haan did not require contestants to disclose that the contestant-created Pinterest boards endorsing Cole Haan’s products were motivated by a financial incentive – what the FTC calls a “material connection” – between Cole Haan and the contestants.
Where Do We Go (Wander?) From Here?
Now that the FTC has publicly spoken on the issue of social media contests, it might not be the worst idea in the world to listen to what they had to say. See, in choosing not take enforcement action against Cole Haan (lucky them!), the FTC explained that it had not publicly addressed this issue before, letting Cole Haan off the hook (except as a cautionary tale). But, now the shoe is on the other foot – er, so to speak. Now that the FTC HAS publicly spoken on the issue, when it next comes across a nifty online contest that isn’t clearly disclosed as such, it may very well point back to this one and say, “Hey! You were warned.”
How to apply this in real life? If your contest requires contestants to endorse your product or service to be eligible for the prize, be sure that the fact that that the contestant’s endorsement was motivated by a chance to win a prize is made clear in the form of the contest entries. One way this might be accomplished is to require contestants to post their entries to your chosen social media platform under “Contest Entries” or similar language (as long as they are not otherwise accessible without this connection being clear). Another way might be to require them to include hashtags such as #contest or #contestentry.
The precise method of compliance with the FTC Rule will depend upon your specific facts. As always, I can’t and don’t provide legal advice to non-clients. Legal advice entails applying the law to specific facts. I don’t know what your facts are and any resemblance to them here is purely coincidental. Instead, this post is meant to provide general information, which may or may not be complete and accurate. If you need legal guidance, please feel free to contact me using the contact information on my firm’s web site – www.salberglaw.com.
– Attorney Amy Salberg, B2C-Law – The Law of the Marketplace
*Here are links to the rules of some of the more popular social media platforms for online contests: