The Federal Trade Commission (FTC) recently investigated whether Cole Haan, Inc. violated Section 5 of the FTC Act when it required entrants in its Pinterest contest to pin images of Cole Haan products in order to enter the contest.
According to the FTC, entrants’ pins featuring Cole Haan products were endorsements of the company’s products and the fact that entrants received an entry into the contest in order to win a $1,000 shopping spree was a material connection that needed to be disclosed in accordance with the FTC Guides Concerning the Use of Endorsements and Testimonials (FTC Endorsement Guides). Under the FTC Endorsement Guides, endorsers must disclose any material connections with the advertiser that viewers of the endorsement would not reasonably expect.
Fortunately for Cole Haan, after considering a number of factors, the FTC issued a closing letter declining to pursue enforcement action against the company. In explaining why it declined formal action, the FTC noted that this was the first time it had publicly addressed whether a contest entry was a material connection that needed to be disclosed and whether a pin on Pinterest could constitute an endorsement. The FTC also noted that the Cole Haan contest ran for only a limited length of time and that it drew a relatively small number of contestants and that Cole Haan had subsequently adopted a social media policy addressing the FTC’s concerns. The FTC concluded by stating that it expects Cole Haan to take reasonable steps to monitor its social media influencers’ compliance going forward.
While the FTC chose not to pursue action against Cole Haan at this time, the next company that runs a promotion in violation of the FTC Endorsement Guides may be subjected to enforcement now that the FTC has put the industry on notice as to what constitutes an endorsement and a material connection in connection with a social media promotion. Accordingly, companies should closely scrutinize whether their Pinterest and other social media promotions raise endorsement issues to ensure these promotions are in compliance with the FTC Endorsement Guides.
Third, before running any social media promotion, companies should check the social media platform’s terms and conditions, including Pinterest’s Acceptable Use Policy. Pinterest’s Acceptable Use Policy prohibits promotions that require entrants to pin from a selection of images, and Pinterest has begun to crack down on promotions that run afoul of its Acceptable Use Policy. Notably, failure to comply with a social media platform’s terms may result in the platform terminating a company’s promotion at any time without notice.
Last, the FTC is once again closely scrutinizing endorsements. The FTC’s closing letter came only a few weeks after the FTC announced its settlement with the home security company ADT regarding claims that ADT’s endorsers failed to disclose their material connections and misrepresented themselves as independent reviewers on television programs and in social media (read our previous Alert on the settlement here). The settlement is a further reminder that companies should ensure their bloggers, influencers, spokespeople, and even promotion entrants are disclosing their material connections and institute reasonable monitoring programs to ensure compliance.