Novel Social Media Campaign, Meet Some Old-School Federal Regulators.

Posted by Edward Sharkey on Wed, 06/04/2014 - 04:00

Many businesses use social media to advertise their product or service in creative ways. It can be cost-effective, and it can circumvent consumers’ learned resistance to traditional advertising. As the most inventive among us cross these communication frontiers, however, it is important to remember that some old fashioned government regulation still applies – even on the internet.

The Federal Trade Commission Act (“FTCA”) prohibits unfair and deceptive practices. It applies to traditional forms of advertising (like radio and print ads) as well as online marketing campaigns. A recent letter from the FTC to the shoe company, Cole Haan, concerning the company’s “Wandering Sole” Pinterest campaign made a lot of appreciative marketers say “neat”, and then “wait a minute; what?”

Pinterest is a social media site on which users create virtual bulletin boards. The boards organize “pins,” which are images with links to a website. Pinterest users view each other’s pins by entering search terms or through their “feed.” A user’s feed displays pins and boards the user chose to follow.

Cole Haan’s contest encouraged users to create a “Wandering Sole” board and to pin five of their favorite shoe images from Cole Haan’s contest board thereto. Each pin was to include the #WanderingSole hashtag. Cole Haan offered contestants a chance to win a $1,000 shopping spree.

The FTC took interest in the contest and determined that, under the FTCA, the pins were endorsements for Cole Haan’s shoes. In order to avoid being deceptive under the FTCA, endorsements must disclose the connection between the marketer and the endorser (here, the Pinterest users) if the relationship is not readily apparent. The FTC determined that the Wandering Sole hashtag was not enough to make the relationship apparent to Pinterest users. To comply with the FTCA, Cole Haan should have required users to disclose that the pins were part of a contest.

The FTC did not pursue an enforcement action against Cole Haan, in part because this marked the first occasion where the FTC publicly opined that a pin is an endorsement and that a contest is a material connection that must be disclosed. Other businesses should be aware, however, that the government is watching marketing campaigns with this disclosure standard in mind.

What can businesses do to mitigate the risk?

• Require clear and conspicuous disclosures of the connection between your company and your social media campaign (i.e. #CompanyNameContest);

• Test the disclosures on a variety of devices, including PCs and cell phones, to ensure they are visible to users; and

• Review and comply with the FTC’s .com disclosure requirements.

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