Sweepstakes/Promotions

On February 11, 2016, New York Attorney General Eric T. Schneiderman announced four independent settlements related to the use of allegedly deceptive online testimonials and reviews.  These cases reflect continuing concern by the New York Attorney General’s office over “astroturfing” (the posting of fake or otherwise biased reviews).  We wrote about theses enforcement actions previously here.  Even if a company has its own strong policy in place against the use of such reviews, many companies commonly use third parties to facilitate their use of reviews and endorsements. Thus companies should carefully scrutinize what these affiliates do on their behalf. 
Continue Reading New York AG Targets “Deceptive” Online Endorsements

The days of on-air fast-talking contest announcements are coming to an end.  Last Thursday, the FCC adopted revised rules that allow broadcasters to disclose contest rules on an Internet website, as opposed to reading them over the air.  Prior to this rule change, under the FCC’s “Contest Rule” (47 C.F.R. Section 73.1216), broadcasters that advertised a contest on-air were required to fully disclose the “material terms” of the contest and then conduct the contest substantially as announced or advertised – a requirement that was adopted almost four decades ago, and which the FCC now acknowledges is inconsistent with the way Americans obtain information today.

Those that want to take advantage of the new Internet website option must comply with the requirements that the FCC lays out in the Report and Order, including: 
Continue Reading Hear! Hear! FCC Modernizes Contest Rules for Broadcasters

Picture by methodshop .com  (CC BY 2.0)
Picture by methodshop .com (CC BY 2.0)

The crowdfunding world got a bit more crowded this week–from a legal perspective, at least–when the Federal Trade Commission entered the fray with its first crowdfunding case against a project creator and his allegedly deceptive Kickstarter® Campaign.  The FTC announced Monday on its website that it took action under Section 5 of the FTC Act against Forking Path, Co. and Erik Chevalier, alleging that Chevalier had promised to produce a board game called “The Doom that Came to Atlantic City” with the funds that consumers provided to fund his campaign, but instead used most of the $122,000 that he raised on himself.

According to the FTC, Erik Chevalier misled consumers donating to his Kickstarter project to develop a board game called “The Doom that Came to Atlantic City,” when he represented to backers that if he raised $35,000, they would get certain rewards, such as a copy of the game or specially-designed pewter game figurines. The project garnered a lot of support, and Chevalier ended up raising more than $122,000 from backers, most of whom pledged more than $75 in a bid to obtain those (apparently highly desirable) figurines. For a number of reasons, Chevalier was unable to produce the game, and announced after 14 months that he was cancelling the project.  He promised his backers refunds, but then failed to provide them—which triggered multiple complaints.  Instead, Chevalier used the money raised on unrelated personal expenses such as rent, moving himself to Oregon, personal equipment and other projects.
Continue Reading Don’t Doom Your Crowdfunding Project with the FTC: Keep Your Promises

IronmanSweepstakes and contests seem like they’re a dime a dozen these days, and social media sites like Facebook and Twitter have made the administration of giveaways more accessible and user-friendly for even small business users.  We find that some businesses downplay the complexity of the rules and regulations governing these valuable promotional tools while others don’t even know such laws exist.  A case brought recently by the U.S. Department of Justice (“DOJ”) against the World Triathlon Corporation (best known for running Ironman® Competitions), however, should serve as a warning to think twice before running a sweepstakes or contest without conducting proper legal due diligence.

On May 12, 2015, the DOJ filed a complaint alleging that the World Triathlon Corporation (“WTC”) should forfeit $2,761,901 it obtained in entrance fees from various sweepstakes it conducted from 2013 to 2015.  According to the complaint, the WTC has run the “Ironman Lottery” (the “Lottery”) since 1983 as a means to provide athletes with an opportunity to compete in the Ironman World Championship if they did not otherwise qualify.  In 2015, the fee to enter the Lottery was $50, and participants had the option of purchasing “membership” in the Passport Club for an additional $50, which afforded them an increased chance of being selected in the Lottery.  Winners of the Lottery were selected in a random chance drawing and given the “prize” of participating in the Ironman World Championship.
Continue Reading Running a Compliant Sweepstakes Ain’t No Game: U.S. Department of Justice Claims $2.7 Million in Illegally Obtained Sweepstakes Entrance Fees

This file is made available under the Creative Commons CC0 1.0 Universal Public Domain Dedication

When preparing to run advertising that includes endorsements, our clients frequently ask whether any “magic words” are necessary and how disclosures should be made on space-constrained forums such as Twitter.  On May 29, 2015, the Federal Trade Commission (“FTC”) staff announced it had addressed some of these questions by updating the FAQs to its Guides Concerning Use of Endorsements and Testimonials in Advertising (“Endorsement Guide”), providing some much needed clarity on a variety of endorsement-related issues, including special wording, Twitter disclosures, social media “like” buttons, affiliate marketing, employee endorsements, uploading videos, and more.  
Continue Reading FAQ Series 1: FTC Issues New Guidance on Endorsements and Related Online Disclosures

We love a good March Madness legal blog (see here and here and here)  and NAD gave us some great fodder this month deciding a case between two large daily fantasy sports league websites.   This one wasn’t exactly an upset like so many of the games this year leading to the Sweet 16.   DraftKings claimed it was the “largest US-based destination for daily fantasy sports.”  FanDuel cried foul.  There was no dispute that FanDuel is larger by a significant margin.  The issue was whether the company was US or non-US based, the key factor which would render the claim either literally true or literally false.  This case is a riff on Made in USA analysis.  Instead of focusing on where a good is manufactured, including its component parts, this case looked to the right definition for determining where a corporation is based.  The NAD noted that consumers “often care very much about the domestic nature of products that they purchase, and such sentiments are likely to also be felt about services that they patronize.  For example, for consumers concerned about unemployment in the United States, the fact that a competing company’s labor force resides in another country may be quite important when deciding which company’s website to patronize.”  As an aside, we are not so sure there are consumers who would base a purchase decision on where key executives sit or where key corporate decision are made, as opposed to where a company’s employees reside.  That said, there is certainly an advantage in claiming to be the largest or No. 1, as it may well convey a message that a company has passed the test by rising to the top in terms of market share.   And it is not unusual for a company to try to create a category in which it can be the champion.  NAD said such a claim is particularly impactful in this case because “consumers are attracted to ‘larger’ daily fantasy sports websites because they have larger pools of players and prizes.”
Continue Reading Fantasy League Competitors Battle on the NAD Court for Decision Over Who Can Claim “Largest US-Based Website”

pinterest

Pinterest®, since it first appeared on the scene in 2010, has been the darling of crafty do-it-yourselfers (DIYs), ambitious brides-to-be, fitness aficionados, foodies, and anyone else interested in creating their own little portfolio of images carefully curated from sites around the Internet.  Pinterest has consistently presented itself as a tool that could be used by consumers for a natural, authentic experience, giving users full artistic and creative reign as they pinned images and designed boards.  In fact, Pinterest has been notorious for cracking down on advertisers who use its offerings in any sort of spammy way, including now prohibited “Pin It to Win It” contests.  The site has also received considerable attention for the thorny legal issues that are implicated by its “pin anything you want” philosophy, including copyright, trademark and right of publicity issues.


Continue Reading From Art Gallery to Billboard – The Game-Changing Presence of Promoted Pins on Pinterest®

We’re all pretty used to seeing sweepstakes that require entrants to “like” an advertiser’s or app’s Facebook® page in order to enter—they’re probably the most common type of promotion on Facebook.  Many marketers require consumers to “like” an application’s Page as a condition of entry into a sweepstakes or contest, in order to receive coupons or other rewards, or in order to watch a video or some other type of content.  Advertisers like to do this because in exchange for offering consumers benefits for “liking” their applications’ Pages, the advertisers obtain a guaranteed base of Facebook fans and extend their brand’s reach on Facebook.

But, in a few months, as a result of recent changes to Facebook’s Platform Policy, these examples of “like-gating” will no longer be kosher on the Facebook platform.  Facebook’s revised Platform Policy, updated August 7, 2014, states that developers of Facebook applications may “[o]nly incentivize a person to log into your app, like your app’s Page, enter a promotion on your app’s Page, or check-in at a place.”  The revised policy goes on to state that “Effective November 5th, 2014, you may no longer incentivize people to like your app’s Page.”

Facebook provides these examples of what is no longer allowed:

Facebook


Continue Reading Facebook Changes the Rules Again: The Sally Field Principle of “Likes” on Social Media

ColeHaanOn March 20, 2014, the FTC issued a closing letter to Cole Haan that will affect all kinds of advertisers (and advertisements) on social media.  In particular, it will impact the way that brands interact with users on Pinterest and tell their users to use hashtags in contests and other types of promotions.  So advertisers, #listenup!

The FTC took issue with the shoemaker’s “Wandering Sole” contest on Pinterest, which called for people to create Pinterest boards with images of five Cole Haan shoes, along with pictures of the contestants’ “favorite places to wander.”  Whoever posted the most creative entry would win a $1,000 shopping spree.  Cole Haan told users to include the hashtag “#WanderingSole” with their photos, but—importantly—it didn’t tell participants they also needed to make it clear that they posted the pins in order to enter a contest.

The FTC was concerned because this material connection (the link between the pin and the contest entry) was not disclosed in entrants’ posts.  The letter states that “entry into a contest to receive a significant prize in exchange for endorsing a product through social media constitutes a material connection that would not reasonably be expected by viewers of the endorsement.”   The FTC observed that the participants’ pins featuring Cole Haan products were endorsements of the company’s products, and the #WanderingSole hashtag ineffectively communicated the financial incentive—a material connection—between Cole Haan and the entrant.


Continue Reading FTC Gives Cole Haan’s Contest the #Boot

As we shiver and bundle up against the Polar Vortex here in DC, we are fast approaching the biggest event of the advertising year—the Super Bowl®—held for the first time in the wintry conditions of New Jersey).  With the Olympic Games® in Sochi, Russia after that, and March Madness® following soon thereafter, February and March will be an orgy of watching televised sports for most of us—except for those poor souls who are responding to cease and desist letters for infringing uses of trademarks and/or implying a false affiliation with these winter events.

While the advertising opportunities appear to be rich with both the Super Bowl and the Olympics, advertisers and marketers must be extra cautious when launching ad campaigns that could imply any sort of connection or association with either of these two events or that use the name of the two events for commercial purposes.  The Super Bowl and March Madness are both trademarked terms, and the NFL and the NCAA, respectively, vigorously prosecute unauthorized usage of those marks, sending out dozens of cease and desist letters each year and even bringing lawsuits in some cases.  Moreover, the U.S. Olympic committee enforces U.S laws that expressly protect the use of the word “Olympics” and the interlocking rings, and can be even more aggressive than the NFL and NCAA about stopping “ambush marketing” and unauthorized association with its marks.

So, while many think of the Super Bowl as the ultimate platform for advertisers and marketers to feature their products and services
Continue Reading Advertisers, Don’t Get Caught in the Cold with the SuperBowl, the Olympics and March Madness: Pay Attention to Trademarks!