Fashion brand Cole Haan landed in some hot water for a Pinterest contest when it received a letter from the FTC alleging violations of the Federal Trade Commission Act.
The FTC interpreted the pins as endorsements for the company's "Wandering Sole" contest and dinged Cole Haan for not clearly communicating that there was a financial incentive to win a shopping spree.
So what can small business owners learn from Cole Haan's FTC warning letter?
What Did the FTC's Warning Say?
Cole Haan's "The Wandering Sole" contest asked Pinterest users to create a board and pin five of their favorite Cole Haan shoes with the hashtag #WanderingSole. The winner would receive a $1,000 shopping spree.
In the FTC's warning letter to Cole Haan, the FTC stated that the pins were endorsements for the brand. Further, it wasn't clear to people who didn't know about the contest that contestants -- i.e., those "pinning" images of Cole Haan products -- had the opportunity to win a $1,000 shopping spree.
The FTC also said that Cole Haan didn't instruct contestants to label their Pinterest boards to make it clear that the products were pinned as a part of the contest. Simply including the #WanderingSole hashtag wasn't enough, the FTC said.
Tips for Avoiding Trouble
Under the Federal Trade Commission Act, there must be a disclosure of the material connection between a company and an endorser.
With the popularity of using social media to promote your brand, here are some tips to keep in mind to avoid violating FTC regulations:
- Use clear hashtags like #CompanyNameContest if you're using a social media based contest to get your name out there.
- Include proper disclosures for all advertisements. Although business owners want to draw consumers in, advertisements can't be misleading or deceptive. For example, if you're selling TVs and are offering free installation for a TV purchase of $200 or more, that caveat must be clearly posted in the ad.
- When you're holding a contest, make sure that all entrants get a chance to look at the giveaway rules. The rules should include clauses on eligibility, selection process, how to enter, the prizes and their value, conditions of participation, and disclaimers limiting the company's liability.
- Talk to a small business attorney to be sure you understand the FTC's regulations or to have the attorney review your company's social media marketing plan.
While the FTC isn't taking enforcement action against Cole Haan's Pinterest contest, be sure to steer clear of FTC violations or else your business could face serious fines.
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