#SMH-butnotacontestorsweepstakes – Check Your Online Promotion Hashtag Or Face Scrutiny From The FTC

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As we have reported before, the Federal Trade Commission requires the disclosure of any “material connection” offered in exchange for an online endorsement or post in their Online Endorsement Guidelines. Now, they are applying those rules to online promotions that require contestants to post, tweet or pin certain message to participate.

For those of you with short attention spans, this means that you should make all contestants post, pin, hashtag or use some method that notifies everyone that whatever content the contestants are submitting is part of a contest or sweepstakes.  It could require the use of the word “contest” or “sweepstakes” in all hashtags or posts. Otherwise, the FTC believes consumers are misled by your friend’s endorsement of a product if they don’t know you endorsed it to enter a contest or sweepstakes.

The guidance comes to us courtesy of the FTC’s recent investigation of Cole Haan. The shoe and fashion company conducted a Pinterest contest where contestants had to use the hashtag #WanderingSole. In addition, contestants had to pin five images on the board posting their favorite places to wander. Cole Haan was giving away a $1,000 shopping spree to the most creative entries.

The FTC investigated. Although the FTC decided not to act in this instance, it indicated future contest sponsors may not be so fortunate. Under Section 5 of the FTC Act, the FTC has the ability to pursue claims for “unfair or deceptive acts or practices in or affecting commerce.” By not disclosing a “material connection” between an online endorsement and anything of value the brand may be offering, the FTC suggests you may be engaging in unfair or deceptive acts.

In the Cole Haan case, The FTC determined that each “pin” was an endorsement of the brand and the opportunity to win $1,000 in exchange for the pin was a material connection that should have been disclosed. Simply requiring “#WanderingSole” was not enough to inform other consumers who may view the pins, that they were part of a contest.

Despite these findings, the FTC decided not bring an enforcement action and therefore closed the investigation. The main reason for the lack of enforcement is this was the first time the FTC addressed the issue of whether contests provide a “material connection” offered in exchange for a social media or online action. You can therefore consider this to be the FTC’s warning. If you are doing a contest that requires posting, pinning, tweeting or something similar, then make sure the hashtag includes something that tells the market, this is a contest or sweepstakes. It could be as simple as “#WanderingSoleContest” or “#WanderingSoleSweeps”.

In addition, contest and sweepstakes rules should be prominently displayed so consumers know people are being asked to submit content as part of the contest.

While this may be taking the Online Endorsement Guides a little too far, and the FTC may not prevail in an enforcement action, you are better off letting someone else fight that battle as opposed to you.  The safest course is to require contest or sweepstakes in your user generated content.

This guidance is just one more thing to consider when engaging in online marketing and contests. If you are offering anyone, anything of value (which, apparently now is the opportunity to win a prize, but was more traditionally free product) in exchange for content, then you need to consider including a disclosure of the connection.

You can find read the FTC Closing Letter here, the Online Endorsement Guidelines here, a discussion of the guidelines here, more about appropriate social media policies to address these issues here, and read more about legally compliant online promotions and contests here.

Topics:  Contests & Promotions, FTC, Online Endorsements

Published In: Antitrust & Trade Regulation Updates, Communications & Media Updates, Consumer Protection Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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