42 October 2013 | practicallaw.com
© 2013 Thomson Reuters. All rights reserved.
© Ocean/Corbis
Advertising
and Promotions
in Social Media
Author
GONZALO E. MON
PARTNER
KELLEY DRYE & WARREN LLP
Gonzalo is a partner in the firm’s Advertising Law practice group.
He counsels clients on a variety of advertising and promotional
campaigns, and helps them deal with issues raised by social
media. Gonzalo was named 2012 DC Advertising Lawyer of the
Year by Best Lawyers.
Through social media, companies
advertising their goods and services
or running a marketing promotion can
now reach a much larger audience
more quickly and at a far lower cost.
However, companies must be aware
of the risks and potential liability
associated with advertising and
marketing in social media.
S
ocial media has revolutionized the way that companies advertise
and market their goods and services. Using social media, companies can:
„„Advertise and launch promotions in new ways that did not exist only
a few years ago.
„„Create and execute advertising campaigns and marketing promotions
quickly and easily.
„„Increase consumer engagement in product marketing and advertising.
However, social media also presents new legal challenges. Because social
media tends to be a casual medium that permits companies to launch a
campaign very quickly, many advertisers and marketers assume that the
laws governing the ads and promotions that they run in other mediums
do not apply in social media. This is a mistaken assumption. The same laws
apply to ads and promotions in social media, even though it is not always
easy to comply with them.
© 2013 Thomson Reuters. All rights reserved.
Practical Law The Journal | Transactions & Business | October 2013 43
This article examines key issues for companies to consider
when advertising in social media, including through consumer
endorsements and testimonials, and running a contest, sweepstakes or other promotion through social media.
Search Social Media Risks and Rewards and Company Use of Social
Media: Best Practices Checklist for general information on companies’
use of social media.
ADVERTISING CLAIMS
AND DISCLOSURES
Two basic principles of advertising law apply to all types of
advertising in any media:
„„Advertisers must have a reasonable basis to substantiate
the claims they make in their ads.
„„If an advertiser needs to disclose information to prevent
an ad from being misleading, these disclosures must
appear in a clear and conspicuous manner.
Search Advertising for an overview of US advertising laws.
To comply with substantiation and disclosure obligations when
advertising in social media, companies should:
„„Evaluate their ads in social media the same way that they
evaluate ads placed on television, websites or
other mediums.
„„Ensure that they can support all claims made
in the ads.
„„Disclose all relevant information in a way that consumers
can see and understand.
SUBSTANTIATION OF CLAIMS
Advertisers must have a reasonable basis to support all objective claims in their ads. This requirement applies not only
to express claims (that is, what an ad actually says) but also
to implied claims that a reasonable consumer may infer from
an ad, even if the advertiser did not intend to convey those
claims. Therefore, it is possible that an ad can be literally true,
but still misleading if it conveys a claim that the advertiser
cannot support.
If an ad is challenged, it will be analyzed from the standpoint
of a typical consumer. Accordingly, when reviewing its ads, a
company should step into the shoes of customers who may not
know anything about the product other than what is in the ad
and consider how these customers are likely to interpret the
ad. If the company cannot support every reasonable interpretation, it may need to make changes to the ad.
In general, what constitutes adequate substantiation depends
on six factors, often referred to as the Pfizer Factors:
44 October 2013 | practicallaw.com
„„The
type of product.
type of claim.
„„The consumer benefit from a truthful claim.
„„The ease of developing substantiation for the claim.
„„The consequences of a false claim.
„„The amount of substantiation that experts in the field
believe is reasonable.
(Pfizer Inc., 81 F.T.C. 23 (1972).)
„„The
In most cases, the last factor is the most important and
will determine whether or not substantiation is adequate.
However, it is not always clear what is considered reasonable.
One side’s experts will likely disagree with the other side’s
experts on this issue. Therefore, many advertising disputes
focus primarily on the last factor.
Selecting the appropriate substantiation process depends on
the type of claim. For example, if a company wants to advertise
that its airline has the most flights to London or that its store
has the most locations in New York City, substantiation may
only involve counting. However, if the claim is that a vacuum
picks up more dirt or that a detergent gets clothes whiter, the
company may need to perform one or more tests to support
the claim. In most cases, the first step is to determine whether
there is an applicable industry standard test. If there is one, the
company should generally use that test.
If there is no industry standard test, the company may need to
develop its own test. The test should:
„„Mirror real-world conditions as much as possible.
„„Be repeatable.
„„Provide results that are statistically significant.
Certain types of claims, such as health claims, may be subject
to stricter standards (see, for example, FTC v. Reebok Int’l., Ltd.,
No. 1:11-cv-02046-DCN (N.D. Ohio Sept. 29, 2011)).
The substantiation requirement does not change when a company is advertising in social media. All claims about products
or services are subject to the same substantiation requirement,
regardless of whether they are made on television, in print or
through social media. In recent years, the National Advertising
Division (NAD) of the Advertising Self-Regulatory Council, a
self-regulatory body that hears advertising disputes, has issued
various decisions that involve claims in social media. In deciding
these disputes, the NAD applied the same standards that it has
applied in other contexts (see, for example, NAD v. Cardo Sys.,
No. 4934 (NAD Nov. 14, 2008)).
CLEAR AND CONSPICUOUS DISCLOSURES
If it is necessary to disclose information to prevent an ad from
being misleading, that information must be disclosed in a clear
and conspicuous manner. When evaluating disclosures, the
© 2013 Thomson Reuters. All rights reserved.
The Guidelines expressly state
that a particular platform should
not be used if it does not permit
an advertiser to make clear and
conspicuous disclosures when required.
Federal Trade Commission (FTC), the NAD and other regulators often disapprove of the practice of including disclosures
in footnotes or other places that are remote from the claim the
disclosures are intended to modify. Consumers are likely to
read a headline, but may not always read every sentence on a
page. There are many cases in which fine-print footnotes have
been held to be inadequate to disclaim or modify a claim made
elsewhere in the ad (see, for example, AT&T Serv., Inc. v. Verizon
Wireless, Inc., No. 5411 (NAD Jan. 5, 2012)).
The law does not mandate a font size, color or specific placement. The lack of specificity provides advertisers with some
flexibility. However, there is also no clear answer for what
constitutes sufficient disclosures. The FTC does provide some
guidelines in its .com Disclosures: How to Make Effective Disclosures
in Digital Advertising (Guidelines). For example, an advertiser
should generally make sure that:
„„The disclosures appear:
zz close to the claim they modify; and
zz in a location where people are likely to see them.
„„The font color and font size of the disclosures make them
easy to read.
The FTC describes these (and many other) concepts in more
detail in the Guidelines (for more information, search FTC
Releases Revised Online Advertising Disclosures on our website).
The original version of the Guidelines was published in 2000,
long before social media existed as it is known today. When
the FTC updated the Guidelines in 2013, it emphasized that
consumer protection laws apply equally to advertising across
all mediums, whether ads appear on a desktop computer, a
mobile device, a blog or other social media channels.
While it is not always easy to make disclosures in social media, advertisers are not exempt from complying with the
disclosure requirement when advertising in social media. The
Guidelines expressly state that a particular platform should
not be used if it does not permit an advertiser to make clear
and conspicuous disclosures when required.
© 2013 Thomson Reuters. All rights reserved.
ENDORSEMENTS AND TESTIMONIALS
One of the most common ways to advertise and market
products and services in social media is to use celebrity or
consumer endorsements and testimonials. Like other types of
advertising, endorsements and testimonials must be truthful
and not misleading. The FTC released in 2009 a new version
of its Guides Concerning the Use of Endorsements and Testimonials in
Advertising (Endorsement Guides), which provide guidelines
to assist advertisers in meeting their legal obligations when
using endorsements and testimonials in advertising (16 C.F.R.
§§ 255.0–255.5). (The FTC uses the words endorsements
and testimonials interchangeably, often referring to them as
endorsements.)
In the revised Endorsement Guides, the FTC clarified that the
terms endorsement and testimonial:
„„Refer to more than just a celebrity or consumer talking
about a product on television.
„„Apply to comments made in social media.
The Endorsement Guides include various provisions that pertain to messages in social media, such as blogs, word-of-mouth
marketing and other promotions in which companies encourage
consumers to speak on their behalf.
In recent years, the FTC has conducted a number of investigations involving endorsements in social media. In some cases,
the FTC entered into settlements with the advertisers that ran
the campaigns, where the advertisers agreed to pay money
and make significant changes to their advertising practices. In
other cases, the FTC decided not to pursue enforcement
actions and closed the investigations.The resulting settlements
and closing letters provide valuable guidance for advertising in
social media.
IDENTIFYING ENDORSEMENTS
According to the FTC, a statement made by a consumer in social
media will be treated as an endorsement if, viewed objectively, it appears that the relationship between the advertiser
and the speaker is of a type that the speaker’s statement can
Practical Law The Journal | Transactions & Business | October 2013 45
be understood to be sponsored by the advertiser (74 Fed. Reg.
53124-01, 53126 (Oct. 15, 2009)).
The FTC encourages advertisers to ask whether, in making
statements about a product or service, the speaker is acting
independently or on behalf of the advertiser. If the speaker is
acting independently, the statement will not be an endorsement subject to the Endorsement Guides. If the speaker is
acting on behalf of the advertiser, the statement will be an
endorsement subject to the Endorsement Guides.
The FTC has stated that the relevant facts in this determination
are extremely varied and cannot be fully enumerated, but include:
„„Whether the speaker is compensated by the advertiser or
the advertiser’s agent.
„„Whether the product or service in question was provided
for free by the advertiser.
„„The terms of any agreement.
„„The length of the relationship.
„„The previous receipt of products or services from the
same or similar advertisers, or the likelihood of future
receipt of products or services.
„„The value of the items or services received.
(74 Fed. Reg. at 53126.)
The question of whether a specific statement is subject to the
Endorsement Guides will often have to be determined on a
case-by-case basis. However, the greater the connection is between a company and the speaker, the more likely it is that the
company will have to comply with the Endorsement Guides.
LIABILITY FOR CLAIMS MADE BY ENDORSERS
Advertisers must ensure that claims in their ads are truthful, and
may be held liable for any false or misleading claims. Advertisers
may also be held liable if they include a false or misleading claim
made by a consumer in their ads. While this is not a new concern, the Endorsement Guides go a step further and provide
that an advertiser may be liable for claims made by consumers
even if the advertiser does not use those claims itself.
The Endorsement Guides state that, even though an advertiser
may not have control over a specific statement made in new
forms of consumer-generated media, the statement may still
be treated as an endorsement under the Endorsement Guides
(with no automatic disqualification for the advertiser’s lack of
control over the statement). Therefore, an advertiser may be
liable for an endorser’s statements, even if the advertiser:
„„Did not authorize the consumer’s statements.
„„Had no ability to control the consumer’s statements.
The FTC’s position on liability for statements made by endorsers could greatly expand the scope of content for which
advertisers are responsible.
46 October 2013 | practicallaw.com
In the Endorsement Guides, the FTC provides an example
of an advertiser that asks a blogger to try a new lotion. Even
though the advertiser does not make any claims about the lotion’s ability to cure skin conditions, the blogger writes that
the lotion cures eczema. The FTC states that the advertiser
is liable for the misleading or unsubstantiated representations
made through the blogger’s endorsement (16 C.F.R. § 255.1).
This is a troubling proposition for many advertisers because
most campaigns in social media inherently involve giving up
some level of control over their messages.
While the FTC acknowledges that an advertiser may have no
control over statements made by an endorser, the FTC still
believes liability may be appropriate on the general basis that,
by engaging in social media:
„„It is foreseeable that an endorser may make
a false claim.
„„The advertiser has assumed the risk and any
potential liability that accompanies this risk.
The FTC does note, however, that before prosecuting advertisers in these circumstances, it would exercise its prosecutorial
discretion and consider:
„„Efforts made by advertisers to advise endorsers of their
responsibilities.
„„Actions taken by advertisers to monitor endorsers’
online behavior.
(74 Fed. Reg. at 53127.)
To date, none of the FTC’s actions in the social media space
have focused on false claims made by endorsers. Instead, the
FTC’s actions have focused on whether endorsers appropriately disclosed their connections to the companies that are
marketing and selling the endorsed products.
DISCLOSURE OF MATERIAL CONNECTIONS
The Endorsement Guides state that if there is a material
connection between an advertiser and an endorser, the
endorser must disclose that connection (16 C.F.R. § 255.5).
While this may not seem controversial, what constitutes a
material connection may be broader than most people think.
For example, even though giving a blogger a free low-value
sample may not trigger the disclosure requirement, giving the
blogger a few of those samples can trigger the requirement.
Even intangible benefits, such as a chance to win a prize,
could necessitate disclosures. The FTC states that although
the endorser has primary responsibility for disclosing the
connection, advertisers should establish procedures to:
„„Ensure that endorsers make the disclosures.
„„Take appropriate steps if an endorser does not make the
disclosures.
(74 Fed. Reg. 53124-01, 53135-36 (Oct. 15, 2009).)
© 2013 Thomson Reuters. All rights reserved.
ADVERTISING AND MARKETING TOOLKIT
The Advertising and Marketing Toolkit available on practicallaw.com offers
a collection of resources designed to assist counsel in identifying key
legal and business issues when undertaking advertising and marketing
activities. The Toolkit features a range of continuously maintained
resources, including:

Online
Advertising and Marketing

Comparative

Sales
Advertising Law in the US
Promotions, Contests and Sweepstakes

Advertising
Agreement

Cause-related

Mobile
Marketing by For-profit Companies Checklist
Marketing: What Companies Need to Know
Shortly after the revised Endorsement Guides were released,
the staff of the FTC’s Division of Advertising Practices
conducted an investigation into whether AnnTaylor Stores
violated Section 5 of the Federal Trade Commission Act (FTC
Act) in connection with a blogging promotion conducted by
the company’s LOFT division. LOFT had provided gifts to
bloggers who attended previews of its Summer 2010 collection. The FTC was concerned that some of the bloggers failed
to disclose that they received gifts for posting blog content
about the preview event.
Ultimately, the FTC decided not to recommend enforcement.
In a letter addressed to LOFT’s attorneys, the FTC staff
explained that their decision was based primarily on the following three factors:
„„There had only been one preview event, so presumably
there was no pattern of violations.
„„Only a small number of bloggers posted content about the
preview events, and several of those bloggers disclosed
that LOFT had provided them with gifts.
„„LOFT adopted a written policy stating that it will not
issue gifts to bloggers without informing the bloggers that
they must disclose receipt of the gifts in their blogs.
(AnnTaylor Stores Corp., No. 102-3147, 2010 WL 1638436 (F.T.C.
April 20, 2010).)
The FTC staff noted that they expected LOFT to honor its
policy and to monitor bloggers to make sure they comply.
A number of other companies have found themselves in
a similar position to LOFT. For example, in 2011 the FTC
investigated a promotion using social media that had been
conducted by one of Hyundai’s advertising agencies. As part
of that promotion, bloggers were given gift certificates as an
incentive to include links to Hyundai videos in their posts or
© 2013 Thomson Reuters. All rights reserved.
to comment on Hyundai’s upcoming Super Bowl ads. Many
of the bloggers did not disclose that they had received the gift
certificates. However, after reviewing the promotion, the FTC
decided not to pursue the case because:
„„The FTC determined that:
zz Hyundai did not know about the incentives;
zz only a small number of bloggers were involved; and
zz some of the bloggers did disclose they had received
an incentive.
„„Although advertisers can be held responsible for the
actions of their agents, the actions in the case ran counter
to both Hyundai’s and the advertising agency’s social
media policies.
„„The advertising agency promptly took action after it
learned that some bloggers had not made the appropriate
disclosures.
(Hyundai Motor Am., No. 112-3110, 2011 WL 5843762 (F.T.C.
Nov. 16, 2011).)
Not all companies have experienced the same results. A public
relations agency hired by video game developers agreed in
2010 to settle FTC charges that it engaged in deceptive advertising in social media (Reverb Commc’n, Inc., No. 092-3199,
2010 WL 4897037 (F.T.C. Nov. 22, 2010)). According to the
FTC, Reverb Communications encouraged its employees to
pose as ordinary consumers and post reviews of the games on
Apple Inc.’s iTunes store, without disclosing that the reviews
came from paid employees working on behalf of the developers. Under the settlement order, Reverb and its owner were:
„„Required to remove any previously posted endorsements
that misrepresented the authors as independent users.
„„Barred from engaging in similar conduct in the future.
Practical Law The Journal | Transactions & Business | October 2013 47
The FTC announced in 2011 a settlement with a company
that sold guitar lesson DVDs using social media. According to
the complaint, Legacy Learning Systems recruited affiliates
to promote its courses through endorsements. In exchange,
affiliates received commissions on sales resulting from
referrals. The FTC charged that the company disseminated
deceptive ads by representing that the endorsements reflected
the views of ordinary and independent consumers, without
clearly disclosing that the affiliates were compensated. To
settle the case, the company agreed to:
„„Pay $250,000.
„„Monitor affiliates to ensure they disclose the commissions.
(Legacy Learning Sys., Inc., No. 102-3055, 2011 WL 1055393 (F.T.C.
Mar. 15, 2011).)
AVOIDING LIABILITY FOR ENDORSERS’ ACTIONS
FTC settlements and closing letters provide valuable lessons
to companies that use endorsers to advertise. Steps companies
can take to avoid liability include:
„„Determining whether a third party qualifies as an
endorser. The first step is to determine whether a third
party qualifies as an endorser under the Endorsement
Guides. The analysis is not always easy, but advertisers
should think carefully about whether they are providing
an incentive to a third party to speak on their behalf and
whether that incentive would come as a surprise to a
typical consumer.
„„Preparing a contract or other guidelines to govern
endorsers’ actions. When working with endorsers,
companies should prepare a contract or other guidelines that
govern what the endorsers can and cannot do.The document
should require endorsers to disclose any connections between
them and the company and, because the company may be
liable for endorsers’ claims, it should include some guidance
about what endorsers can and cannot say. However, according
to the Endorsement Guides, endorsements must reflect the
endorser’s own opinions and beliefs. Companies must be
careful to only provide guidance and not prescribe what an
endorser should say (16 C.F.R. § 255.1).
„„Monitoring endorsers and ensuring that they
comply with the contract or guidelines. It is not
enough to simply have an agreement with endorsers.
As the FTC noted in its comments to the Endorsement
Guides, and in its closing letters to LOFT, Hyundai and
others, advertisers must also monitor endorsers and take
steps to ensure that they comply with the advertiser’s
policies. It may be necessary for a company to assign an
employee or agent to periodically review statements
made by endorsers in social media to ensure that claims
are accurate and that appropriate disclosures are being
made. If an endorser does not comply with the contract
or guidelines, the company should contact the endorser
48 October 2013 | practicallaw.com
to correct the problem. If any problem continues, the
company should consider terminating the relationship.
Unfortunately, there is no one-size-fits-all approach to advertising in social media. To develop an approach that best
fits advertising needs and offers adequate legal protection, a
company’s marketing team should work closely with its legal
counsel to identify:
„„The company’s goals.
„„The social media platforms the company wants to leverage.
„„The types of claims that endorsers may make.
„„The incentives that may be given to endorsers.
„„Other factors that could lead to potential legal liability if
they are not addressed.
Companies that take shortcuts in this area are much more
likely to attract unwanted attention from regulators.
CONTESTS AND SWEEPSTAKES
Companies frequently market their products and services
through contests, sweepstakes or other types of promotions. Social media has changed the way companies run these
promotions.
Because of the number of people who use social media on a
daily basis, many companies are now able to reach a wider
audience at a much lower cost. Additionally, because of the
interactive nature of social media, it is often possible to keep
people engaged for longer periods of time. Some companies
focus exclusively on these benefits and erroneously assume that,
because promotions in social media tend to be more casual than
promotions in other media, they do not require the same legal
attention or create the same concerns as other types of promotions. However, not only do the same laws apply, running a
promotion in social media presents a unique set of issues.
When planning to run a promotion in social media, companies
must consider:
„„Legal requirements. Despite their more casual
appearance, contests, sweepstakes and other promotions
run in social media are subject to the same laws that apply
to promotions in other platforms.
„„Third-party platform requirements. If a promotion
is run on a third-party platform, the platform may have
additional requirements that apply. The most popular
platforms used for these promotions (such as Facebook
and Twitter) have internal requirements.
„„Consumer involvement. Consumer involvement often
presents the most challenging aspect of using social media
for promotions, especially when promotions involve
user-generated content or consumer involvement in
selecting winners. While permitting more consumer input
promotes increased engagement, too much consumer
© 2013 Thomson Reuters. All rights reserved.
engagement can create problems for the company running
the promotion.
LEGAL REQUIREMENTS
When running a contest, sweepstakes or other type of promotion, state contest and sweepstakes laws primarily govern the
structure and operation of the promotion. However, other laws
may also apply, depending on the type of promotion involved.
Contest and Sweepstakes Laws
Marketers often use the words contest and sweepstakes
interchangeably. However, these terms refer to different types
of promotions that can be subject to different legal requirements. In general:
„„A contest is a promotion in which prizes are awarded
based on skill.
„„A sweepstakes is a promotion in which prizes are awarded
based on chance.
Companies should not assume that just because a promotion does not include a random drawing, it is automatically
skill-based. A promotion can be chance-based even without
a drawing. Different states have different thresholds for what
constitutes skill, so it is not always easy to figure out which
type of promotion is involved.
There is no single sweepstakes law or contest law. Instead, these
types of promotions are subject to a patchwork of laws that
are spread out across all 50 states, as well as a few federal laws.
Fortunately, there are more similarities than differences.The most
important principle under these laws is that a company cannot
require people to make a purchase or payment in a promotion in
which winners are selected on the basis of chance. There are two
common ways to deal with this prohibition:
„„Eliminate any payment requirement.
„„Do not involve chance.
In most cases, it is permissible to include a method of entry
that involves a purchase, as long as a free method of entry is
also provided. Companies should consider what works best in
the situation, but typical options are to allow people to enter
for free either:
„„Online.
„„By sending a request through the mail.
To ensure compliance:
„„Both entry methods must be treated equally (for example,
a contest cannot place a limit on the number of free
entries but allow people to get unlimited entries by
making purchases).
„„The free option must be carefully disclosed. Many
companies have faced legal action for burying that fact in
the fine print.
© 2013 Thomson Reuters. All rights reserved.
Companies have more flexibility to require a purchase in a skill
contest, but this option is not easy to accomplish. States define
skill differently, so a promotion that qualifies as skill-based in
one state may not qualify as skill-based in another. There is
little legal guidance in this area. Most of the legal cases are
decades old and involve games that bear little resemblance
to today’s games. Even when a contest promoter can ensure
that a game is skill-based, companies should keep in mind that
some states prohibit purchase requirements, even in a skill
contest. Therefore, any contest with a purchase requirement
requires a state-by-state analysis.
Most states require companies to make certain disclosures
about their promotions. When drafting contest rules and
promotional disclosures, companies should beware of simply
copying what another company has done. It is dangerous to assume that a third party got it right or that its disclosures apply
to a different promotion.
In addition to disclosure requirements, some states may require companies to register, and even post a bond, before they
can launch certain promotions. For example, Florida and New
York both require companies to register and post bonds if a
sweepstakes includes more than $5,000 worth of prizes (Fla.
Stat. § 849.094 (2013) and N.Y. Gen. Bus. Law § 369-e (2013)).
Search Running a Sweepstakes or Contest in the US for more on
promotion laws.
Other Applicable Laws
Other areas of law that frequently apply to contests and
sweepstakes include:
„„Privacy (for more information, search US Privacy and Data
Security Law on our website).
„„Intellectual property (for more information, search
Intellectual Property on our website).
„„Tax.
When running a promotion, companies should obtain expert
legal advice in these individual areas. There may also be
additional laws that apply to promotions, such as state laws
relating to minors and industry-specific laws that relate to
specific types of promotions.
PLATFORM REQUIREMENTS
It may not be enough to ensure compliance with relevant
federal and state laws. If a company runs a promotion on a
third-party platform, it needs to determine whether that platform has its own requirements. Many popular social media
platforms have rules and guidelines that apply to promotions.
If a promotion violates platform guidelines, the company may
be prohibited from using the platform. Companies should also
remember that compliance with platform guidelines does not
mean that the promotion complies with legal requirements.
Practical Law The Journal | Transactions & Business | October 2013 49
Facebook Promotions Guidelines
The Facebook promotions guidelines (available at facebook.com)
restrict how companies can use Facebook’s features in their
promotions. In the past, Facebook required companies to
administer all promotions through apps and did not allow
an entry to result from liking a page, checking in to a place or
connecting to an app. However, Facebook has recently revised
its promotion guidelines. Now, promotions may also be administered on Facebook page timelines, and companies can:
„„Collect entries by having users post on the page, or
comment or like a post.
„„Collect entries by having users message the page.
„„Use likes as a voting mechanism.
Companies still may not administer promotions on personal
timelines.
Facebook also requires companies to make the following disclosures, which should be included in the contest rules, on the
page where the contest is administered or in the app:
„„The complete release of Facebook by each entrant.
„„An acknowledgment that the promotion is not sponsored,
endorsed or administered by, or associated with,
Facebook.
„„Information provided by participants is provided to the
company and not Facebook.
Twitter Promotions Guidelines
Twitter also has guidelines (available at support.twitter.com)
governing promotions. For example, Twitter asks companies
to discourage users from creating multiple accounts and
from posting the same tweet repeatedly. Therefore, a promotion that awards a prize to the person who tweets the same
message the most times would violate the Twitter guidelines.
Companies should be aware that Twitter has shut down at least
one promotion that encouraged repeated posts.
Also, if under a promotion people have to include a hashtag
in tweets, hashtag topics need to be relevant to the tweet.
Encouraging users to add a hashtag to unrelated tweets might
cause the participant to violate Twitter’s user rules.
Pinterest Promotions Guidelines
Pinterest recently announced guidelines (available at business.
pinterest.com) governing promotions. Under the guidelines,
Pinterest requests, for example, that companies make it easy
for consumers to participate by providing clear instructions.
Additionally, like Twitter, Pinterest wants companies to
encourage quality over quantity. Companies should avoid a
promotion that awards a prize to the person with the most
pins. Pinterest also warns companies not to suggest that
Pinterest has any connection to the promotion.
50 October 2013 | practicallaw.com
Planning Promotions
in Social Media
When planning a promotion in social media, companies should:
Ensure
compliance with contest or sweepstakes laws,
as applicable.
 Ensure
compliance with any rules established by the
platform on which the promotion will run.
 Think
through the potential legal and other issues and take
steps to guard against them.
 Consider
the risks and benefits of turning over some control
to consumers.
 Enter
into contracts with any third parties that may be
assisting the company with any aspects of the promotion.
When handling problems related to a promotion in social
media, companies should:
 Assemble
the relevant stakeholders and assess all options
before taking any action.
 Consider
the risks and benefits of:
laddressing
problems quickly to prevent bad news from
spreading;
ltaking
down a problematic post; or
ladmitting
problems to consumers.
 Remember
that solutions to problems may play out in
public and an ill-conceived solution can be worse than
the original problem.
Other Platforms
Other platforms may adopt promotions guidelines as
their popularity increases. Companies should check the
applicable rules and guidelines before running a promotion
on a particular platform. Not every platform has welcomed
contests and sweepstakes. For example, Google recently
imposed guidelines (available at google.com) for its Google+
platform. Google+’s Pages Contest and Promotion Policies
prohibits users from running contests, sweepstakes and other
promotions directly on their Google+ Page, but permits users
to run a promotion on another site and include a link to it on
their Google+ Page.
USER-GENERATED CONTENT
Many contests in social media invite consumers to submit
content for judging, such as photos or videos. While a
company can usually ensure its own content complies with
applicable laws, it is harder to ensure that user-generated
content is lawful. Companies themselves can face legal
actions for what consumers do in the context of a company’s
marketing campaign, even if the company did not authorize
the consumer’s acts. In recent years, companies have been
© 2013 Thomson Reuters. All rights reserved.
sued over content that consumers posted on their websites
when that content allegedly:
„„Violated a third party’s copyrights.
„„Included false claims.
„„Included defamatory statements.
To avoid or reduce the risk of liability for user-generated
content, companies should clearly disclose what consumers can
and cannot submit. When planning a promotion, a company
should take time before launching the promotion to think about
what types of problems it is likely to encounter and proactively
guard against those problems. For example, if accepting submissions from entrants, a company should disclose that people
have to submit original content that does not violate any third
party’s copyrights. If a promotion invites consumers to talk
about a company’s products, it should take steps to ensure that
entrants do not make false claims about those products or a
competitor’s products.
Despite using best efforts to avoid problematic content, people may still post submissions that violate third-party rights.
Fortunately, there are laws that can protect companies in these
situations, including:
„„The Digital Millennium Copyright Act (DMCA).
The DMCA provides safe harbor protection from
potential liability arising from publishing content that
infringes a third party’s copyrights if that content was
posted by another person (17 U.S.C. § 512). However,
the DMCA safe harbor does not provide blanket
immunity. Companies need to take a number of steps
to take advantage of the safe harbor, and they may lose
their protection if they have knowledge of infringement
or are aware of facts from which infringement should
be apparent. For more information on the DMCA safe
harbor, search Digital Millennium Copyright Act (DMCA): Safe
Harbors for Online Service Providers on our website.
„„The Communications Decency Act of 1996 (CDA).
Section 230 of the CDA may also provide protection
if consumers post content that includes defamatory
statements or false claims (47 U.S.C. § 230). Courts have
been generous in applying these protections to specific
situations, but these protections are not unlimited. For
example, when Quiznos invited consumers to make
commercials showing why Quiznos sandwiches were
better than Subway sandwiches, Subway sued, arguing
that many of the commercials included false claims. A
federal district court held that Quiznos could be liable if
it played a role in developing the problematic content and
noted that a jury should decide whether the company was
involved (Doctor’s Assoc. v. QIP Holder, No. 3:06-cv-1710VLB, 2010 WL 669870 (D. Conn. Feb. 19, 2010)). The case
later settled.
The DMCA and CDA provide limited protections against
liability for problematic content posted by rogue consumers.
However, if the company invites these problems, pointing
the finger at those consumers is insufficient to avoid liability.
When planning a promotion that involves user-generated content, companies should:
„„Carefully consider what consumers are being asked to submit.
„„Warn consumers against submitting various types of
problematic content.
„„Set up a process to comply with the safe harbor
requirements under applicable laws.
Most importantly, while it may be able to escape liability for
problematic content posted by consumers, a company will not
be able to escape liability for any user-generated content that
the company uses itself.
OTHER USER-GENERATED PROBLEMS
Many companies also run into problems when they invite
consumers to play a role in selecting contest winners. When
a company turns over complete control to consumers, it may
not like the results. Many companies have had their promotions
hijacked by consumers. For example, a company might decide
to run a contest that invites consumers to name the company’s
newest product, with the winner to be selected entirely by
public vote. Consider the consequences for the company if the
person with the least desirable entry manages to rally all of his
friends to continuously place votes for that entry.
Additionally, public voting tends to invite cheating. For
example, entrants may come up with creative solutions or
computer programs to circumvent voting limits. In some
cases, cheating can be so extensive that it can derail the
promotion. Companies have spent countless hours trying to
plug holes, respond to complaints and regain control of their
promotions after cheating occurred. Therefore, while it is
acceptable to give consumers some input, they should never
be given complete control. At a minimum, the company
should set a limit on the number of times a person can vote to
prevent any individual from having too much influence over
the outcome. It is not enough to set the limit, the company
must be able to enforce it.
© 2013 Thomson Reuters. All rights reserved. Use of Practical Law websites and services
is subject to the Terms of Use (http://us.practicallaw.com/2-383-6690) and Privacy Policy
(http://us.practicallaw.com/8-383-6692).
Practical Law The Journal | Transactions & Business | October 2013 51