Social media continues to attract millions of users—and with them, companies have quickly followed. Brands try to leverage social networks like Facebook, Twitter, Vine, Instagram and Pinterest to promote their brands through promotions like sweepstakes and contests. The regulatory and legislative guidance governing these promotions has been hazy at best.
Recently, however, the Federal Trade Commission (FTC) shed a little light on the context of a sweepstakes run on Pinterest. Like most social media services, Pinterest has “brand guidelines” that govern commercial use of its platform, but they are more focused on avoiding an over-commercialized or “spammy” use of the Pinterest platform. Until this month there has been no guidance directly from the FTC regarding how its “.com disclosures” guidelines apply to sweepstakes promotions.
Now the FTC has issued an official position on a Pinterest promotion. The FTC was concerned that a Cole Haan contest in which users were asked to pin images of Cole Haan products with a hashtag, #WanderingSole, in exchange for a chance to win a $1,000 shopping spree may have violated Section 5 of the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices.” Section 5 requires disclosure of any material connection between an endorser and the advertised product where consumers might reasonably not expect that connection. For example, in a 30-second television advertisement, consumers reasonably expect that the celebrity featured is probably being paid by the brand, but if a blogger recommends a product, consumers might not know whether that blogger had been paid or otherwise incentivized to endorse it, and it therefore must be disclosed.
The FTC held that the Cole Haan contest pins were endorsements of the products, and that the #WanderingSole hashtag failed to adequately communicate the fact that the contest entrants were incentivized to endorse them by the shopping spree sweepstakes. The FTC decided not to pursue enforcement action because it had never before addressed the question of whether entry into a contest is a material connection between the advertiser and endorser that triggers a disclosure obligation, nor had it addressed whether a pin on Pinterest constitutes an endorsement.
Now that both of these open questions have been addressed, companies will need to be cautious in structuring their promotions on Pinterest and other social media sites. Specifically, any pins, tweets, or other social media posts that are required as a condition of entry in a sweepstakes should, under the official rules, be required to be clearly designated as contest entries. Advertisers should also be particularly cautious about properly disclosing endorsements on Pinterest, as it is clearly an area of interest for the FTC.