In a closing letter declining to bring enforcement action against shoemaker Cole Haan, FTC staff stated that it believes “Pins” on Pinterest featuring a company’s products can constitute an endorsement of those products, and that if the pins are incentivized by the opportunity to win a significant prize in a contest, contestants should be instructed to label their pins appropriately.
The closing letter follows an investigation into whether Cole Haan violated Section 5 of the Federal Trade Commission Act in connection with its “Wandering Sole” Pinterest Contest. Section 5 of the FTC Act protects consumers from “unfair or deceptive acts or practices.” Pursuant to its Section 5 authority, the FTC requires disclosure when there exists a connection between a product endorser and the seller of the advertiser product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience).
For a chance to win a $1,000 shopping spree, Wandering Sole contestants were instructed to create Pinterest boards that included five re-pins of shoe images from Cole Haan’s Wandering Sole Pinterest Board. According to the FTC, these re-pinned images featuring Cole Haan shoes constituted product endorsements that were “incentivized by the opportunity to win” a shopping spree, therefore creating a material connection requiring disclosure. The contest rules directed contestants to caption each pin with “#WanderingSole,” but the FTC determined that the hashtag was not adequate in communicating the material connection — i.e., financial incentive — between Cole Haan and its contestants. The FTC concluded that “entry into a contest to receive a significant prize in exchange for endorsing a product through social media constitutes a material connection that would not reasonably be expected by viewers of the endorsement.”
Although the FTC decided not to recommend enforcement action against Cole Haan in this matter in part because the FTC had “not previously publicly addressed whether entry into a contest is a form of material connection, nor . . . whether a pin on Pinterest may constitute an endorsement,” this is not the first time that the FTC has provided guidance on how the material connection disclosure requirement might apply in the online context. Last year, following publication of its revised Endorsement Guides, the FTC released guidance entitled “.com Disclosures: How to Make Effective Disclosures in Digital Advertising,” which stated that, for example, a blogger who receives a free sample of a product reviewed by the blogger generally must disclose that fact as a material connection.
Supporting its decision not to seek action against Cole Haan, the FTC emphasized that the contest had a limited duration and attracted a small number of contestants. Cole Haan also adopted a social media policy that adequately addressed the FTC’s concerns.