I’m John Doe, and I Endorse this Product

Sweepstakes sponsors have, for many years, required prospective sweepstakes entrants to take some action to promote the respective sponsor’s brand, products and/or services in order to gain entry into a given sweepstakes.  Such actions may include submitting a positive testimonial, publishing brand names/images on a social media website such as Pinterest, taking other actions on social media such as “liking” those sponsors’ Facebook pages, or otherwise endorsing a given brand, product and/or service.

The advantage of such an approach to the advertiser should be obvious: By requiring consumers to promote a given product in order to enter a sweepstakes, the advertiser is able to capitalize on a widespread, grass-roots marketing effort – which ostensibly involves authentic, word-of-mouth recommendations from consumers rather than more mundane marketing methods – at little to no cost.

However, such guerilla marketing practices are increasingly coming under regulatory scrutiny, may run afoul of certain Federal Trade Commission (“FTC”) rules and regulations and may also violate the Terms of Use of certain social media websites.

View to A Sweepstakes Shill

A few years back, the FTC revised certain of its rules concerning the use of endorsements and testimonials by publishing the updated Federal Trade Commission Guidelines Concerning the Use of Endorsements and Testimonials (“FTC Guidelines”).  These FTC Guidelines, as well as other FTC regulations governing deceptive marketing in general, require that any material relationship between the advertiser and the subject endorser be prominently disclosed (such as a benefit, or prospective benefit, derived by the endorser in connection with providing the endorsement).

In March 2014, in reviewing the “Wandering Sole” online promotion operated by retailer Cole Haan, the FTCannounced, for the first time, that an individual’s participation in a social media promotion may constitute a product endorsement under the FTC Guidelines and other applicable FTC regulations.  In connection with the Cole Haan promotion at issue, prospective entrants were required to create a Pinterest board dedicated to the Cole Haan promotion and post at least five images of Cole Haan products to that board in order to enter the contest.  Cole Haan would then select the winner based on the creativity of the qualifying Pinterest boards.

According to the FTC, the posting of images of Cole Haan products constituted an endorsement,  while individuals viewing the Cole Haan-themed Pinterest boards were not likely aware of the incentive that the contest entrants had in endorsing the Cole Haan products.

On a related note, in November 2014, Facebook changed its Platform Policies for mobile applications (“apps”) to prohibit the practice of requiring prospective entrants to “like” Facebook pages in order to enter a sweepstakes or access any app content and/or app pages – including app sweepstakes entry pages.

Facebook’s stated purpose for making these changes was to help ensure that the process of “liking” a given Facebook page is more authentic, and more accurately reflects actual user sentiment and preferences, rather than serving merely as a sweepstakes entry requirement.

Transparency Is the Best Policy

Sweepstakes operators need not necessarily abandon the practice of utilizing grass-roots marketing in connection with their promotions.  However, in order to avoid regulatory issues, sweepstakes operators must ensure that entrants (and, in some instances, the sweepstakes operators themselves) include prominent disclosures detailing the prospective benefits that entrants could receive in connection with their subject endorsement, testimonial or other promotional efforts.

In addition, sweepstakes operators must be mindful of the rules governing promotions that are run, at least in part, through popular social media websites such as Facebook, Twitter, LinkedIn, Pinterest and others.

Businesses that do not ensure that their promotions are compliant with FTC regulations, as well as the many rules governing the use of social media websites, could be exposed to the risk of regulatory investigation and other legal action.  Therefore, it is recommended that you retain qualified legal counsel to assist you where you plan on operating any promotion, contest or sweepstakes.