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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

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<em>"This pin motivated by my desire to win fabulous prizes."</em>

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That's the sort of disclaimer that participants in social media contests may need to start using under <a href="http://www.ftc.gov/system/files/documents/closing_letters/cole-haan-inc./140320colehaanclosingletter.pdf" target="_blank" rel="noreferrer noopener">a March 20, 2014 letter ruling</a> from the Federal Trade Commission.

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As I've written and presented about before, the FTC has been very strict in recent years about enforcing Section 5 of the FTC Act as applied to social media. That statute (and its implementing regulations) require the disclosure of "material connections" between a marketer and an endorser when their relationship is not otherwise apparent in the context of the communication that contains the endorsement. (And it's been <a href="http://www.bna.com/nutrisystems-pinterest-board-b12884911017/" target="_blank" rel="noreferrer noopener">applied</a> to Pinterest ads before.)

<a href="http://www.colehaan.com/" target="_blank" rel="noreferrer noopener">Cole Haan</a>, a footwear company, recently ran a contest on Pinterest called "<a href="http://www.pinterest.com/search/pins/?q=#wanderingsole&amp;rs=rs" target="_blank" rel="noreferrer noopener">Wandering Sole</a>." The tagline read, "If your soles could wander wherever they want, where would they go? Pin your wanderlust wish list for the chance to win a $1,000 Cole Haan shopping spree." Contests like these are a common way for brands to build grassroots buzz and goodwill. Each time a participant pinned an image with the hashtag #WanderingSole, their followers were reminded of the Cole Haan brand.

In the FTC's view, however, these pins also amounted to "endorsements of the Cole Haan products." Worse, the FTC did not think that participants' followers would understand that "the pins were incentivized by the opportunity to win a $1000 shopping spree." &nbsp;Standing alone, the "#WanderingSole hashtag [did not] adequately communicate the financial incentive--a material connection--between contestants and Cole Haan."

Even though it was technically the contestants who omitted this disclosure, the FTC places the burden on the brands to make users aware of these requirements. &nbsp;Therefore, the FTC determined that Cole Haan had engaged in a deceptive marketing practice.

In this instance, however, the FTC withheld punishment. For one thing, even the FTC realized that it was creating a new rule here, since it had never previously addressed social media contests from this perspective. Moreover, the Wandering Sole promotion was a small one, and Cole Haan acted quickly to change its policies.

Nevertheless, the FTC warned, the company behind the next contest might not get off so easily.

Augmented Legality

Emerging Media and Technologies

Partner

Brian D. Wassom

Information Technology Transactions

FTC: Social Media Contests Are Endorsements, Require Disclosure

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FTC: Social Media Contests Are Endorsements, Require Disclosure

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