What Made News?
In a recent letter, the Federal Trade Commission (FTC) alleged that a promotional contest on Pinterest violated Section 5 of the FTC Act. Although the FTC did not take any direct enforcement action against Cole Haan, the letter forced Cole Haan to discontinue the contest and is one of the first instances in which the FTC has offered an opinion about what it takes to keep social media contests and promotions on the right side of federal advertising laws.
What was Cole Haan's Promotion?
In its "Wandering Sole" promotion, Cole Haan instructed participants to create boards on the social media platform Pinterest titled "Wandering Sole." Participants were required to post five images of Cole Haan shoes to their boards along with five images of the participants' "favorite places to wander." Participants were also required to "tag" each pin with the hashtag "#WanderingSole." The participant with the most creative entry was eligible to win a $1,000 shopping spree.
What was the Problem?
The FTC argued that the "Wandering Sole" contest violated the FTC's Endorsement Guides (and therefore Section 5 of the FTC Act) because the contest rules did not require participants to properly disclose their participation in the contest. More specifically, the Endorsement Guides require the disclosure of any "material connection" between a marketer and an endorser when the relationship is not otherwise apparent to a reasonable consumer. Here, the FTC argued that there was a material connection between Cole Haan and contest participants because the potential $1,000 shopping spree provided a financial incentive for participants to post images of Cole Haan products to their Pinterest boards, essentially turning each participant into a Cole Haan endorser. Although participants were required to use the "#WanderingSole" tag on their pins, the FTC claimed that this particular hashtag did not "adequately communicate" the material connection between participants and Cole Haan.
Why is This Significant?
Promotional contests on the online social media platforms — from Facebook and Pinterest to Vine and Instagram — are a burgeoning field of digital advertising, but the rules of the road for these types of promotions are still somewhat uncertain. The FTC has said that federal advertising laws and guidelines apply to online advertising just as they do to any other medium, but advertising on the Internet presents new challenges (and opportunities) that marketers and regulators have never grappled with. The FTC's Dot Com Disclosures answered some of the questions about how to advertise properly on social media, but the FTC's letter to Cole Haan is one of the first times that the FTC has offered an opinion regarding the specific types of disclosures that advertisers have included in online contests and promotions in order to keep them in line with federal law. In particular, this is one of the first times that the FTC has commented on the sufficiency of a hashtag disclosure in the context of a contest or promotion.
What's Next?
Until the FTC offers more guidance, advertisers should pay extra attention to their choice of contest hashtags. For contests on image-heavy social media platforms, like Pinterest and Instagram, advertisers may need to review past practices to ensure that hashtags provide a more explicit disclosure than they have used in the past.
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