Client Alerts
April 14, 2014

FTC fires shot across the bow: Is your social media contest next?

Stites & Harbison Client Alert, April 17, 2014

by Stites & Harbison, PLLC

Our 2012 alert, “Like us” On Social Media! An Endorsement Under Advertising Laws? addressed the Federal Trade Commission’s decision on the implication of consumer “Likes” on social media platforms such as Facebook. At that time, the FTC engaged in a common sense interpretation of the consumer impression created by Facebook “Likes” as implying only “general social endorsement” that could be used in marketing by companies without running afoul of false advertising laws, even where the “Likes” were solicited in the context of a “like-gated” contest that requires entrants to “Like” a company as a condition to entry.

In its recent letter directed to upscale shoe retailer Cole Haan, the FTC seemed to narrow its position on the permissibility of social media endorsements, at least in the context of consumer contests that solicit entries through social media postings endorsing particular products. March 20, 2104 Letter, FTC File No. 142-3041.

Cole Haan, the upscale shoe retailer, invited consumers to enter its “Wandering Sole” contest offering a $1,000 shoe shopping spree to winners. Contest rules instructed contestants to create Pinterest boards that included five Cole Haan shoe images along with pictures of five places that contestants would like to roam wearing their favorite shoes.

The FTC wrote, “we believe that participants’ pins featuring Cole Haan products were endorsements of the Cole Haan products.” The FTC went on to suggest that the fact that “pinners” were incentivized to make the postings amounted to a material connection between advertiser and endorser that would not be anticipated by consumers who encountered the postings. Specifically, the hash tag used in the contest #WanderingSole was found inadequate to inform consumers of the material connection.

Nevertheless, the FTC treated the Cole Haan closing letter as a “shot across the bow” and declined to open an enforcement action, in part because the FTC recognized this ruling as a “first’ of its kind. More importantly to businesses (as the FTC letter will be considered a warning to all against similar future conduct), the FTC placed significant emphasis on the fact that Cole Haan had since adopted a social media policy that adequately addresses the FTC’s concerns.

Has your company adopted a social media policy to help insulate against false advertising claims that might arise in connection with online contests? This is an easy and low-cost step that makes more sense than guessing where the new online “endorsement” will be found. A copy of the FTC’s Advertising Guides are available on the FTC web site.

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