Pillsbury Winthrop Shaw Pittman

Running a sweepstake or contest on social media?

By Michael P Heuga and David E Hopmann

If entry for the chance to win a prize requires participants to post content featuring your company’s products or services, the participants should be instructed to disclose that their posts are pursuant to a contest. Specifically, the Federal Trade Commission (FTC) recently indicated that when a company runs a sweepstake, contest or other prize promotion on a social media platform, and the method of entering the contest involves posting content about the sponsoring company’s products or services (such as by ‘pinning’ photos of the company’s products on Pinterest), the company is expected to tell the participants to make clear that their posts are being made as part of a contest.

It has long been recognised that endorsements and testimonials regarding a company’s products or services — whether the endorsements are made by consumers, experts or celebrities — can have a powerful influence on consumer purchasing decisions and, if done improperly, can mislead consumers. Under the FTC’s authority to regulate commercial advertising under section 5 of the FTC Act (which prohibits ‘unfair or deceptive acts or practices in or affecting commerce’, including advertising of products and services that misleads or is likely to mislead consumers), the FTC maintains a set of Guides Concerning the Use of Endorsements and Testimonials in Advertising. The guides are published, in part, to assist advertisers using endorsements and testimonials from doing so in a manner that violates the FTC Act. The guides were first issued in the 1970s and have been updated a few times over the years, including most recently in 2009.

When the guides were originally issued, most endorsements and testimonials were disseminated by advertisers through traditional media such as radio and television commercials, billboards and print ads, and not by the endorsers themselves. In the age of the internet, companies now have the ability also to have their products and services mentioned, favourably reviewed or otherwise praised on the company’s behalf directly by consumers and other third parties — through blogs, social media and other new media platforms. The FTC’s update of the guides in 2009 confirmed that the old rules continue to apply to endorsements and testimonials made directly through these new media platforms…

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