After investigating a contest promoting Cole Haan products on Pinterest, the FTC determined that contestants' pins were endorsements and that these endorsements failed to disclose that contestants posted the pins as part of a contest offering a prize.
The contest instructed contestants to create Pinterest boards using pins of shoe images from Cole Haan's Wandering Sole Pinterest Board as well as images of the contestant's favorite places to wander, and to include "#WanderingSole" in each pin description. The most creative entry would win a $1,000 shopping spree.
In a letter to Cole Haan's counsel, the FTC stated its position that "entry into a contest to receive a significant prize in exchange for endorsing a product through social media constitutes a material connection that would not reasonably be expected by viewers of the endorsement." The FTC then reinforced that Section 5 of the FTC Act 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. Having found that the contest pins were incentivized by the opportunity to win a $1,000 shopping spree, which was a material connection, use of the "#WanderingSole" hashtag did not adequately communicate the financial incentive between contestants and Cole Haan.
The letter indicates that the FTC did not pursue an enforcement action for several reasons. First, the FTC acknowledged that "we have not 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." Second, the contest ran for a short period of time and drew limited participation. Third, after being contacted by the FTC, Cole Haan adopted a social media policy that adequately addressed the FTC's concerns. The FTC also stated that it expects Cole Haan to monitor influencers' compliance with the disclosure obligations.
Based on this letter, marketers should consider how social media contests may create material connections between the sponsor and participants that need to be disclosed, together with appropriate ways to ensure those disclosures are made.