The Federal Trade Commission’s Division of Advertising Practices has recently finalized its investigation into Cole Haan’s “Wandering Shoe” contest wherein contestants could enter the contest by creating Pinterest boards titled “Wandering Sole” and including five shoe images from Cole Haan’s Wander Sole Pinterest Board as well as five images of contestants’ “favorite places to wander.” Contestants also were instructed to use #WanderingSole in each pin description. The contestant with the most creative entry would, under the contest rules, be awarded a $1,000 shopping spree from Cole Haan.
In its investigation closing letter, the FTC stated that it believes “that participants’ pins featuring Cole Haan products were endorsements of the Cole Haan products, and the fact that the pins were incentivized by the opportunity to win a $1,000 spree would not reasonably be expected by consumers who saw the pins.” The FTC also stated that “Cole Haan did not instruct contestants to label their pins and Pinterest boards to make it clear that they had pinned Cole Haan products as part of a contest” and that the #WanderingSole hashtag did not adequately communicate “the financial incentive—a material connection—between contestants and Cole Haan.”
As we have discussed previously, the FTC, in its Endorsement Guides, requires the disclosure of any “material connection” offered in exchange for an online endorsement or post. Failure to provide such a disclosure potentially violates Section 5 of the FTC Act (15 U.S.C. § 45 Unfair methods of competition unlawful; prevention by Commission). Based on the letter to Cole Haan, it is clear that the FTC is now applying those rules to online promotions that require contestants to post, tweet or pin certain message to participate.
The FTC decided against recommending enforcement action in the Cole Haan case in part because the FTC had “not previously publicly addressed whether entry into a contest is a form of material connection” and had not previously “explicitly addressed whether a pin on Pinterest may constitute an endorsement.”
The FTC’s explanation for not recommending enforcement action makes it clear that companies taking similar promotional strategies in the future may not avoid enforcement action. This development may be of significant importance to the many businesses who promote their products or services by encouraging individuals to reference brand-specific hashtags in return for discounts or the chance to win prizes. For promotions in which entrants post, pin, hashtag or otherwise use social media to enter, the contestants should be required to include content in the entry mechanism (perhaps in the hashtag itself) which indicates that the “endorsement” was part of a contest or sweepstakes entry; otherwise, the action could be viewed by the FTC as an endorsement that will mislead others if it is not clear that the apparent endorsement was given as an entry into a promotion or contest.