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FTC publically addresses compliance violation with Pinterest contest

If you think all your social media promotions have been legally compliant, you may need to think again. Even if you abide by all the rules and regulations pertaining to sweepstakes and contests, there is another federal government regulation that you need to keep in mind.

Recently the Federal Trade Commission (FTC) completed an investigation into a Pinterest-based contest conducted by Cole Haan. The contest rules instructed participants to create Pinterest boards titled “Wandering Sole” and pin five images of shoes from Cole Haan’s Pinterest board as well as five images of the participants “favorite places to wander”, all tagged #WanderingSole. Cole Haan would then judge all the entries and award one grand prize winner based on creativity a $1,000 shopping spree.

Sounds like a pretty simple Pinterest contest that is similar to many others. However, in a public letter from the FTC sent to Cole Haan’s counsel, the FTC expressed concern that the participants re-pinning of Cole Haan products were endorsements of the products and there was no clear indicator that the pins were incentivized by the opportunity to win the $1,000 shopping spree. The FTC claimed that by instructing participants to just use the hashtag #WanderingSole, Cole Haan did not adequately communicate that this was a contest entry with a financial incentive between the participant and the Sponsor, Cole Haan.

The letter stated that Cole Haan may have violated Section 5 of the FTC Act, which “requires the disclosure of a material connection between a marketer and an endorser when their relationship is not otherwise apparent from the context of the communication that contains the endorsement.” Under these circumstances, entry into a contest to receive a prize in exchange for endorsing a product through social media constitutes a material connection that would not reasonably be expected by viewers of this endorsement.

Upon further review, the FTC chose not to pursue any action against Cole Haan at this time. They stated the reasons being that they had not publicly addressed that entry into a contest is a form of material connection nor whether a “pin” on Pinterest may constitute an endorsement.  So we now need to be aware that the FTC has “publicly addressed” this issue. They also stated that they chose not to pursue this because it drew a small amount of participants and that Cole Haan has since adopted a social media policy that meets the FTC’s concerns.

So you may now be wondering how the ruling impacts future plans for social media promotions, particularly those that encourage user-generated content to be created and shared not just on Pinterest, but other social media networks such as Twitter, Instagram and Facebook. One simple way is to clearly communicate that this is a promotion with the hashtag. You can do that by adding a second #hashtag such as #sweeps #contest or #giveaway to your promotion, or combine it into one i.e.,  #WanderingSoleContest.  Since this does make the hashtag longer, you may want to keep the promotion name as short as possible.

Another thing to keep in mind when structuring your promotion is to ask the participants to create something more original, not just post or repin photos of your product from your website. For example, invite them to submit a photo of their recipe creation or in the case of this recent Instagram Contest from the folks at Kissimmee, FL, invite them to create a video describing how they would “Rock their Vacation” in Kissimmee.

I wrote about these new FTC endorsements guidelines when they were originally introduced back in 2009. At the time it was a warning to many bloggers who were writing posts for various brands and not disclosing that they were receiving payment or free product in return. At the time the FTC said that they had “no intention of shutting down the blogosphere” and to go after every little blogger (which we were all very concerned about). Instead it was more targeted to “those affiliate marketers who make exaggerated claims just to drive web traffic to make money”. We couldn’t agree with them more on this issue.

Now I don’t think the FTC intends to go after every little social media contest, but instead they want marketers to be aware that if they are requesting user-generated content tied to their brands, than they should make it more obvious why this content is being created in the first place.  Makes overall perfect sense when you think about it. One of the first rules of social media that I learned and incorporated into all my presentations was transparency. That still rings as the #1 rule in my opinion.