Eric Goldman alerted us this weekend (via Twitter) to an FTC ruling that may have a significant impact on the way that brands interact with users on Pinterest. The FTC determined (see embedded letter below) that a Cole Haan “Wandering Sole” contest that asked users to pin/re-pin images of Cole Haan products in exchange for a chance to win a $1,000 shopping spree “violated Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45.”
That section protects consumers against “Unfair or Deceptive Acts or Practices.” It’s also the section used to compel advertising or product-endorsement disclosures in a wide array of situations online.
The FTC found that the contest created a potentially deceptive situation between users participating in the contest and their peers or followers on Pinterest:
The contest rules instructed contestants to create Pinterest boards titled “Wandering Sole.” The contest rules further required that a board include five shoe images from Cole Haan’s Wandering Sole Pinterest Board as well as five images of the contestants’ “favorite places to wander.” Finally, contestants were instructed to use “#WanderingSole” in each pin description. Cole Haan promised to award a $1,000 shopping spree to the contestant with the most creative entry.
We believe that participants’ pins featuring Cole Haan products were endorsements of the Cole Haan products, and the fact that the pins were incentivized by the opportunity to win a $1000 shopping spree would not reasonably be expected by consumers who saw the pins.
The Pinterest page (above) invites users to click through for a chance to win. However, it appears that the rules page has now been replaced by Cole Haan’s Facebook page.
Pinterest is a now critical marketing platform for brands and retailers. The FTC decision that incentivized pins are product endorsements that need to be disclosed complicates how brands can interact with users on the site.
It seems clear that disclosures can immunize the practice from FTC scutiny. But the specifics of what must be disclosed and in what form precisely will have to be worked out.