The FTC Isn’t All About Fun and Games

The Federal Trade Commission recently issued a letter that life science companies should review and take note. Specifically, the FTC sent a letter to Cole Haan, a prominent shoe marketer, to signal the FTC’s concern that participants in a Cole Haan social media contest might be considered endorsers and, as such, appropriate disclosures of the relationship should be included.

Social Medial Contestants as Endorsers

At issue was a Cole Haan social media contest, where contestants created Pinterest boards featuring Cole Haan shoe images, images of their favorite places to “wander” (likely in Cole Haan shoes), and a hashtag in pin descriptions, all for the opportunity to win a $1,000 shopping spree. The monetary incentive was not disclosed by the contestants in their pins.

The FTC said:

  • The pins featuring the products were endorsements;
  • The contestants were not instructed by Cole Haan to label the pins to make clear they were pinned as part of a contest;
  • The hashtag did not disclose the financial incentive, ”a material connection” between the company and the contestants; and
  • Without more, the average customer would not understand the endorsement relationship between the contestant and Cole Haan.

While the FTC decided not to take formal enforcement action at this time (for a number of reasons not discussed here), it is a statement of concern that reflects the FTC’s greater focus in the area of endorsements and testimonials on social media and the FTC’s desire for clear and conspicuous disclosures from companies.

AGG Observations

  • The FTC has primary jurisdiction of over-the-counter drug, cosmetic, food and non-restricted medical device advertising. These industries should, therefore, be cognizant of the Cole Haan letter.
  • Even though the Food and Drug Administration did not issue the letter, we know the FTC and FDA communicate with one another. It is not inconceivable for FDA to adopt a similar position or defer to the FTC for enforcement when it comes to endorsements and disclosures in social media promotions. Therefore, in addition to the industries identified above, prescription drug and restricted medical device companies should also be mindful of the FTC’s guidance in the Cole Haan letter.
  • If the promotion relates to a prescription drug, remember to submit Form 2253 to FDA at the time of initial dissemination or publication (and follow FDA’s labeling and promotional requirements).
  • Companies should be well-versed with the FTC’s guidances on dot come disclosures and on endorsements to understand what is and is not permissible. These guides are evolving and are updated from time to time.
  • It is quite probable that the government will begin to focus more resources on social media review to identify contests or promotions that do not disclose material connections between the sponsoring company and the contestants.
  • At the time a contest or sweepstakes is cleared for applicable state and federal rules and regulations, companies should also ensure to consult the above FTC guides to clearly and conspicuously identify in its social media campaign the nature of such contest or sweepstakes, applicable rules, and associated financial incentives and relationships with contestants.
  • It may be prudent to use the word “contest” or “sweepstakes” in each campaign communication (by the company or a contestant) and provide links to the promotional campaign web site.
  • Companies should update their social media and marketing policies to ensure they comply with the guidance provided by the FTC.

Please feel free to contact us with any questions.

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