The Federal Trade Commission (FTC) recently investigated whether Cole Haan’s “Wandering Sole” social media contest violated Section 5 of the FTC Act, which prohibits deceptive practices.  In doing so, the FTC issued a warning—sponsors of social media promotions must take precautions to ensure that their contests and sweepstakes comply with the FTC’s truth-in-advertising guidelines for endorsements and testimonials.  According to the FTC, requiring contest or sweepstakes entrants to post social media content that promotes a sponsor or its products in exchange for an opportunity to win a prize may constitute an endorsement requiring disclosure of the incentivized relationship.

Wandering Sole Contest

Cole Haan required those who entered its Wandering Sole contest to create Pinterest boards titled “Wandering Sole,” and to pin five images from Cole Haan’s Pinterest board and images of their “favorite places to wander.”  Cole Haan required entrants to include the #WanderingSole hashtag in each pin.  The entrant with the most creative pin would win a $1,000 shopping spree.

The FTC issued a warning letter to Cole Haan, explaining that contest entries (pins) featuring Cole Haan products were a form of product endorsement, 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.”  Therefore, the fact that entrants were required to pin in exchange for the opportunity to win a valuable prize should have been clearly disclosed pursuant to the FTC’s Guides Concerning the Use of Endorsements and Testimonials (FTC Endorsement Guidelines).  The FTC stated that the #WanderingSole hashtag did not sufficiently communicate the incentivized relationship between Cole Haan and the contest entrants.

The FTC decided not to take formal enforcement action against Cole Haan, in part because the FTC had not previously publicly announced whether a contest entry is a material connection that may require disclosure, or that a Pinterest pin can function as an endorsement.  Further, Cole Haan subsequently adopted a social media policy that addressed the FTC’s concerns.  The FTC advised that it “expects that Cole Haan will . . . monitor social media influencers’ compliance with the obligation to disclose material connections when endorsing its products.”

Takeaways

Sponsors of social media promotions should carefully consider whether their promotions raise endorsement issues and, if so, comply with the FTC disclosure and truth-in-advertising guidelines.  While the FTC has not provided clear guidance on how to disclose a material incentivized connection between promotion sponsors and entrants, requiring entrants to prominently use a hashtag containing the term “contest” or “sweepstakes” (e.g., #ColeHaanContest) should provide sufficient disclosure.  In a slightly different advertising context, for example, the FTC has indicated that disclosures such as #ad and #sponsored may be sufficient to disclose an incentivized relationship in certain social media postings.  Further, the FTC may be ramping up monitoring and enforcement associated with endorsements and testimonials, so brands should take extra care to ensure that their social media policies and marketing programs incorporating bloggers and other influencers comply with the FTC Endorsement Guidelines.

© 2014 Perkins Coie LLP