Companies frequently try to engage customers through social media in a variety of ways, including contests that involve photos of the companies’ products and brands. Fashion design company Cole Haan was investigated by the Federal Trade Commission (FTC) regarding a contest that asked contestants to pin five shoe photos from Cole Haan’s “Wandering Sole” Pinterest Board, as well as five photos of places where the users like to wander, onto the contestants’ own Pinterest boards. Entrants had to use the hashtag “#WanderingSole” in each pin description. Cole Haan offered a $1,000 shopping spree to the contestant with the most creative entry.
The FTC investigated to determine whether Cole Haan had violated Section 5 of the Federal Trade Commission Act by deceptive acts or practices. In re Cole Haan, FTC File No. 142-3014 (closing letter, Mar. 20, 2014). The financial incentive of the potential shopping spree caused the FTC to conclude that the pinned photos were “endorsements” that lacked adequate a necessary disclosure of the financial incentive:
We believe that participants’ pins featuring Cole Haan products were endorsements of the Cole Haan products, and the fact that the pins were incentivized by the opportunity to win a $1000 shopping spree would not reasonably be expected by consumers who saw the pins. Moreover, we were concerned that Cole Haan did not instruct contestants to label their pins and Pinterest boards to make it clear that they had pinned Cole Haan products as part of a contest. We do not believe that the “#WanderingSole” hashtag adequately communicated the financial incentive—a material connection—between contestants and Cole Haan.
As background, the FTC announced its revised endorsement guides in October of 2009. Among other changes, the FTC expressly extended the guidance to bloggers and “word of mouth” campaigners to recommend that they disclose “material connections,” including financial incentives, with the seller. The FTC’s endorsement guides are located at 16 C.F.R. Part 255. The FTC stated that “the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.” FTC Press Release, “FTC Publishes Final Guides Governing Endorsements, Testimonials,” Oct. 5, 2009. The endorsement guides are not regulations, but violating them can cause the FTC to consider whether the violator’s actions constitute unfair or deceptive acts or practices under Section 5 of the Federal Trade Commission Act.
In this instance, the FTC decided to close its investigation into the Cole Haan contest, for three reasons:
First, we have not previously publicly addressed whether entry into a contest is a form of material connection, nor have we explicitly addressed whether a pin on Pinterest may constitute an endorsement. Second, the contest ran for a limited length of time and drew a relatively small number of contestants. Finally, Cole Haan has since adopted a social media policy that adequately addresses our concerns. The FTC staff expects that Cole Haan will take reasonable steps to monitor social media influencers’ compliance with the obligation to disclose material connections when endorsing its products.
Is your company running a contest or sweepstakes on Pinterest or other social media? Does a contestant need to provide a photo to enter? Are those photos visible to the public? Are they posted on your company’s site or somewhere else? Is it clear that they have been posted as part of your company’s contest/sweepstakes? Do your official rules of the contest or sweepstakes adequately address these issues?
Sue Ross (susan.ross@nortonrosefulbright.com / +1 212 318 3280) is a lawyer in Norton Rose Fulbright’s US intellectual property practice.
