The Federal Trade Commission (“FTC”) recently investigated Cole Haan, Inc. to determine whether a contest that it conducted on https://www.pinterest.com violated Section 5 of the FTC Act, which, in part, 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 endorsement. The FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising and the FTC’s updated .com Disclosure Guides explain the “material connection” principle in more detail, but neither guideline document mentions sweepstakes or contest entries as the type of incentive that creates a material connection between the sponsor and entrants.
Cole Haan’s contest asked each entrant to create a “Wandering Sole” board, to pin 5 shoe images from Cole Haan’s own “Wandering Sole” board, and to pin 5 images of the entrant’s “favorite places to wander”—all for the chance to win a $1000 shopping spree.[i] Each pin was to include the hashtag #wanderingsole. In a letter closing its investigation, the FTC found that:
- The pins featuring Cole Haan products were endorsements;
- Consumers who saw the pins and boards would not reasonably be aware that the pinners were incentivized by the chance to win the contest;
- The pins and boards were not adequately labeled to show the material connection between Cole Haan and the entrants (i.e., that the pinners were incentivized with an entry in a contest); and
- Cole Haan had failed to instruct entrants to disclose such material connection.
The FTC did not pursue further enforcement against Cole Haan in part because this is the first time the FTC has publicly addressed whether entry into a contest is a form of material connection and whether a pin on Pinterest may constitute an endorsement. In addition, Cole Haan subsequently adopted a social media policy to address the FTC’s concerns with respect to disclosure of material connections by Cole Haan endorsers.
We note that the position taken by the FTC that pins can be endorsements is not inconsistent with the position taken by the National Advertising Division of the Better Business Bureau (“NAD”) nearly two years ago in its report on Nutrisystem Inc.’s “Real Consumers. Real Success.” board on Pinterest. The NAD found that consumer pins such as “Christine B. lost 46lbs on Nutrisystem” were testimonials.
Key Takeaways: The Cole Haan FTC letter reinforces our recommendation that advertisers must tread carefully when conducting promotions on Pinterest and all other social media outlets (including, without limitation, Twitter, Vine, Tumblr and Instagram). Yes, the principles discussed in the Cole Haan FTC letter apply across social media outlets; not just on Pinterest. Specifically, when advertisers ask consumers to post on social media as a means of obtaining an entry in a promotion where the entry promotes the brand or includes branded material (whether the brand is promoted in the text, a hashtag, a photo or a video), the entry post must include some clear and conspicuous indicator that the consumer has received an entry in a promotion (e.g., sponsors can require the unique hashtag for the entry post to include the word “entry”, “contest”, or “sweepstakes”).
[i] We note that the Cole Haan contest, as described in the FTC’s letter, seemingly violates the Pinterest policy that prohibits asking consumers to pin from a selection (see Pinterest Brand Guidelines). As we have explained in a recent post, advertisers must also always remember to review the applicable platform’s guidelines before running a promotion on that social media platform.