Recently the FTC issued a warning letter to Cole Haan for a hashtag contest they were promoting on Pinterest, Contestants had to create a Pinterest board and post five pictures of Cole Haan shoes, pictures of places where they love to wander, and tag each photo with #WanderingSole, in order to win $1000 shopping money at Cole Haan.
Essentially, the FTC issued a letter, the first of its kind, to Cole Haan (but has not yet taken enforcement action) stating that the hashtag does not do enough to tell consumers that participants are endorsing the product for the purposes of entering a contest (as opposed to projecting their “true” opinion of the product or brand) thus the FTC indicated that the contest misled general consumers.
“Although participants were required to use the “#WanderingSole” tag on their pins, the FTC claimed that this particular hashtag did not “adequately communicate” the material connection between participants and Cole Haan.”
In reviewing the FTC endorsement rules (here), Example 9 under Sect. 255.5 (Disclosure of Material Connections) seems to provide some insight into this particular situation. It reads:
“A young man signs up to be part of a ‘street team’ program in which points are awarded each time a team member talks to his or her friends about a particular advertiser’s products. Team members can then exchange their points for prizes, such as concert tickets or electronics. These incentives would materially affect the weight or credibility of the team member’s endorsements. They should be clearly and conspicuously disclosed, and the advertiser should take steps to ensure that these disclosures are being provided.”
What does this mean for hashtag contests? The FTC requires advertisers to ensure that participants in the contest are disclosing their relationship to the contest. This means hashtags will need to include some reference to the contest as hand. In this example, #wanderingsole may have to become #wanderingsolegiveaway or #wanderingsole #contest or other similar hashtags that would help a general consumer understand that individuals who posted pictures of shoes in places they like to wander are actually participating in a contest, rather than posting such content for the sake of posting.
What do we recommend? Being transparent. Disclose relationships whenever possible. If you have concerns, run your contest rules, hashtag or otherwise, by an attorney to make sure you are complying with applicable contest rules and FTC endorsement guidelines.
Update on 12.8.14: The FTC has since commenced action to enforce against deceptive advertising practices by publicizing on its blog their proposed complaint and draft settlement with the advertising firm Deutsch LA, Inc., involving endorsements posted by social media users. Deutsch LA, the advertising agency used by Sony for its PlayStation Vita gaming console, “misled consumers with deceptive product endorsements” by directing consumers, and Deutsch LA’s own employees’ conversations toward indirect advertising for PlayStation Vita, using the hashtag “#gamechanger”. The FTC’s message is clear – even social media advertising campaigns must show clearly and conspicuously any material connection between the endorser and the advertiser in order to avoid treading into the territory of deceptive advertising.