Advertisers and marketers using Pinterest, you are officially on notice.
When the Federal Trade Commission (FTC) sent a letter to Cole Haan reprimanding the brand for a contest on Pinterest
, the fashion company received a mere slap on the wrist. But now that the FTC has addressed the disclosure of material connections in the context of Pinterest contests, other brands may wish to tread lightly.
Back in the spring, the FTC contacted Cole Haan regarding its “#WanderingSole” contest, claiming the brand failed to instruct contestants about the financial incentive (a $1,000 shopping spree) for creating Pinterest boards entitled “Wandering Sole.”
The contestants were told to include five shoe images, five images of their top “places to wander,” and the above hashtag, with the promise that one superior entry would receive the four-figure prize. But participants were not told to disclose the “material connection” between Cole Haan and their entries, which may have violated the Federal Trade Commission Act.
Advertising rules apply to non-traditional media and non-traditional ads
The FTC has long required advertisers and endorsers to disclose their material connections. In October 2009, the FTC extended its published regulations
to encompass online activity such as social media posts and blogs. In essence, in the instance that consumers would not reasonably expect a financial relationship between two parties, but one exists, the advertiser and endorser must disclose it. If they don't, the advertiser could face a fine (and, in some instances, the endorser might, too).
The FTC’s letter to Cole Haan
showed that the government agency is willing to extend its material connection disclosure requirements to situations in which “endorsers” are not being paid. In the case of the #WanderingSole contest, there was merely the incentive of $1,000, which only a single Pinterest user would win.
But the FTC referred to this as a “significant prize in exchange for endorsing a product through social media,” which qualified as a material connection that viewers of the Pinterest “pins” would not have expected. Therefore, Cole Haan’s failure to recognize that the Pinterest contest entries would be considered advertisements resulted in a number of insufficient disclosures.
Fortunately for Cole Haan, the FTC opted against “recommend(ing) an enforcement action.” Among other reasons cited, the FTC acknowledged it had neither “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.”
Learning from Cole Haan’s contest
Future brands that intend to run similar contests on Pinterest (taking a walk in Cole Haan’s shoes, so to speak) should view Cole Haan’s situation as a clear warning that the FTC may not be as lenient moving forward.
Thus, in future campaigns, companies should recognize that any sponsorship of user content may be deemed advertising, meaning adequate disclosures of the sponsorship relationship are required. Disclosures should be made within the user content itself, or in as close proximity to the advertisement as the media platform allows.
In a promotion similar to Cole Haan’s, one way to accomplish this would be to require users to “pin” an image that clearly indicates the content is sponsored.
When in doubt, disclose material connections
When there is any activity that could be remotely construed as an endorsement, the company should consider disclosing its relationship with the potential endorser. Otherwise, the FTC could view the endorsement as undisclosed advertisements and take action. Certainly, it is difficult for companies to monitor every word said about them online, but they can still be held accountable if necessary disclosures are not made.
The FTC’s letter to Cole Haan should serve as reminder to other brands that, if contemplating contests on Pinterest or other social media outlets, when in doubt, always make (or advise consumers of making) disclosures. For further guidance, potential advertisers should consider reviewing the revised FTC’s “Dot Com Disclosures
,” a guide to making effective advertising disclosures in the online world that was updated in March 2013.
Also, be mindful that another reason the FTC was more lenient towards Cole Haan was the social media policy the company adopted subsequent to the contest that covered the FTC’s concerns. Thus, companies should not only consider consulting with legal experts when it comes to conducting contests through social media (or even offline) but also to consider working with social media experts.
Whitney Gibson is an attorney in the Cincinnati office of Vorys, Sater, Seymour and Pease LLP
, where he leads its Internet defamation group. For additional information, contact Whitney at 855.542.9192 or by email
, and also read more about the practice on its blog