A recent Federal Trade Commission (FTC) investigation looked into whether Cole Haan violated the unfair trade practices section of the law when it required entrants in its Pinterest contest to pin images of the brand’s products in order to enter. This breaks new ground on the levels of scrutiny marketers and PR firms must go to in order to ensure legal compliance with Pinterest contests.
To take part in the Cole Haan Pinterest contest, entrants were required to create boards entitled "Wandering Sole" and pin five shoe images from the brand’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 FTC determined that entrants’ pins featuring Cole Haan images were endorsements of the brand’s products. Notably, the FTC found the pins to be endorsements even though the entrants were not required to state anything about the products. The commission 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 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 they had done so as part of a contest. While Cole Haan required entrants to include the hashtag #WanderingSole in their pins, the FTC found the hashtag did not adequately communicate the material connection between entrants and the brand.
Fortunately for Cole Haan, the FTC issued a closing letter declining to pursue enforcement action against the company. In explaining why, the FTC noted 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 commission also noted the contest ran for only a limited length of time and that it drew a relatively small number of contestants. In addition, the FTC stressed that a factor mitigating against an enforcement action was that Cole Haan had subsequently adopted a social media policy addressing the FTC’s concerns.
There are numerous lessons all brands should glean from this. Four key takeaways are:
•Pinning may constitute an endorsement of a company or its products. As such, if brands want to avoid endorsements in their promotions, they should not require entrants to pin only images of the company’s products to its boards. Instead, they should give entrants flexibility to pin whatever images they want in order to enter the promotion. Of course, 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.
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.
•Entry into a sweepstakes or contest may constitute a material connection that is required to be disclosed under the FTC Endorsement Guides. Thus, if companies want entrants to pin or post the brand’s images in order to enter a sweepstakes or contest, they 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.
•Before running any social media promotion, companies should check the social media platform’s terms and conditions. This includes Pinterest’s Acceptable Use Policy, which prohibits promotions that require entrants to pin from a selection of images. 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 that platform terminating a company’s promotion at any time without notice.
•Fourth, it is clear the FTC is once again closely scrutinizing endorsements. The commission’s closing letter came only a few weeks after it announced its settlement with home security company ADT regarding claims that its endorsers failed to disclose their material connections and misrepresented themselves as independent reviewers on television programs and in social media.
The FTC’s guidance makes it clear that pinning may constitute an endorsement of a company or its products. It similarly underscores that 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, marketers and PR firms should check the social media platform’s terms and conditions to ensure their bloggers, influencers, spokespeople, and even promotion entrants are disclosing their material connections, as well as institute reasonable monitoring programs to ensure compliance.
Michael Lasky is a senior partner at the law firm of Davis & Gilbert LLP, where he heads the PR practice group and co-chairs the litigation department. He can be reached at email@example.com.