Nordstrom 'TweetUp' Racks Up FTC Warning - Free Enterprise
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Nordstrom 'TweetUp' Racks Up FTC Warning

Nordstrom Rack's "TweetUp" marketing campaign may have violated FTC rules, but the incident serves as a good legal reminder for business owners.

The retail chain opened a new store in Boise, Idaho, last spring. To trump up the event, several local residents who were active on Twitter and other social media were invited to a pre-opening event called a "VIP TweetUp," reports Boise's KTVB-TV.

Those who attended were given drinks, appetizers, gift cards, and a chance to do some early shopping. For the privilege of attending, party-goers were encouraged to tweet about the event. As a result, the store may have violated Federal Trade Commission guidelines.

The FTC's Guidelines

Anyone who's paid to endorse a product must disclose the payment from the advertiser, according to the FTC's letter to attorneys for Nordstrom Rack.

The disclosure is to prevent misrepresentation and confusion -- i.e., to distinguish tweets from someone who genuinely likes a product and tweets from someone who was paid to endorse a product or store.

While there is some debate about whether the free food, drinks, and gift cards constituted "payment" at the Nordstrom Rack event in Boise, this is a fine line that many small businesses may not want to walk.

Lessons for Business Owners

Posting to Twitter can be an effective marketing tactic. But if you choose to compensate people to post messages about your business, you will have to tell them about the FTC's requirement to disclose the paid endorsement in their tweets. (Though, practically speaking, this may be challenging in 140 characters or less.) Same goes for Facebook endorsements, and other social media as well.

If you are unsure if you are actually "paying" your endorsers to market your company, you may want to talk to a small business attorney first. As seen in the Nordstrom Rack case, there may be a very fine line between payment and simply allowing someone to attend your party.

In addition, an attorney may be able to help you come up with legal ways to encourage tweeting and guerilla marketing without having to meet FTC regulations for paid endorsements.

As for Nordstrom Rack's "TweetUp," the FTC's letter was just a warning. But the Commission stated that it reserves the right to "take further action as the public interest may warrant."

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