The end of the year is a popular time for consumer promotions. For example, you might sponsor a contest where entrants submit an original recipe and photo of the prepared dish, sponsor a sweepstakes with text messaging as an entry mechanism, engage in charitable fundraising where a percentage of the purchase price for a product will be donated to an organization of choice, allow consumers to create wish lists or videos and share them via e-mail or text messaging, or sponsor a promotion that involves submitting entries via social media with a specific hashtag.
These are fun and creative ways to engage consumers, spread the word about new products and services, and generate goodwill. Just don’t forget to conduct a thorough legal review early on to avoid major pitfalls and possible enforcement action. We offer ten tips to keep in mind as you advertise and promote your company’s brands, products, services, and favorite philanthropies this holiday season.
1. Disclosures and Rules. Clear and conspicuous disclosures in promotional materials are essential to avoid claims of unfairness or deception. The Federal Trade Commission (FTC) revised its.com Disclosures guidance last year specifically to address online and mobile advertising. In addition, most states require Official Rules for contests and sweepstakes, and all promotional materials (which include websites, tweets, and Facebook posts) must display the Official Rules, or at least abbreviated rules with the material terms. Communicating the material terms in social media and banner ads can be challenging given character and space limitations. Many states also regulate the activities of commercial co-venturers (for-profit entities who advertise that a portion of the purchase price of a product or service will be paid to a charitable organization), and require certain disclosures in their advertising.
2. Registration and Bonding. Determine whether the promotion will require registration and/or bonding in any states well in advance of the start date, as this can take time to secure. Some states require sponsors of contests and sweepstakes to post bonds and/ or register the promotion, and commercial co-venturers must register in some states before engaging in cause-related marketing.
3. Trademarks. If you co-sponsor a promotion, engage in fundraising for another organization, or offer prizes that will be provided by a third party, make sure you have appropriate rights to use the other party’s name and trademarks. And don’t automatically assume that you have permission to use trademarks or offer prizes owned by entities that are not affiliated with your promotion, such as referencing the Super Bowl® in advertising or offering Apple® products as a prize.
4. Copyrights. For promotions that involve soliciting photos, videos, recipes, ideas, or other content, consider how the company will use the content (e.g., on a website or social media pages or for product development purposes) and secure appropriate rights to use it. It is also prudent to post submission guidelines to ensure that users own the content and/or have a right to submit it and to avoid content that is offensive or unlawful.
5. Targeting Children. Promotions that are open to minors pose additional considerations. Since minors do not have the legal capacity to contract and agree to the Official Rules and other terms and conditions, it may be necessary to obtain consent from a parent or legal guardian. Also consider whether the prizes are age-appropriate. The Children’s Online Privacy Protection Act (COPPA) restricts the collection of personal information online from children under age 13 without express parental consent, and photos, videos, and audio files are now considered “personal information” under COPPA (in addition to names, addresses, e-mail addresses, and the like). Also keep in mind that social media sites have different ages of eligibility for users, so promotions conducted through these sites should be tailored accordingly.
6. Text Messaging. Encouraging users to provide mobile numbers for friends or enter a promotion via text messaging triggers the Telephone Consumer Protection Act (TCPA). The TCPA prohibits sending SMS messages to a wireless phone without prior consent, which must be written in some cases. Due to the inherent consideration involved with accepting contest or sweepstakes entries via text message, consider offering a free alternative method of entry if winners will be determined by chance (as opposed to a skill contest), since legal games of chance cannot involve any type of consideration. Accepting entries via text messaging for promotions open to children triggers COPPA to the extent that it involves the online collection of personal information through entries.
7. Social Media. Keep in mind that the same laws that apply to traditional forms of advertising apply to social media. In addition, all promotions conducted through social media must comply with the policies, terms, and guidelines for the particular platform. Those guidelines vary and are constantly changing, so you should revisit them periodically. It is also prudent to consult each site’s brand guidelines before using trademarks owned by the platforms.
8. Endorsements and Testimonials. The FTC has been active in enforcing violations of its Endorsement Guidelines as unfair and descriptive practices under Section 5 of the FTC Act. Last month, Sony and its ad agency settled FTC charges that they violated Section 5 and the Endorsement Guidelines when the agency’s employees tweeted about a new Sony product with the hashtag #gamechanger, but without disclosing their connection to Sony and the agency. Earlier this year, the FTC issued a letter to Cole Haan concluding that Pinterest “pins” by contest entrants consisting of images of Cole Haan products constituted an endorsement that required disclosures, and the #WanderingSole hashtag that entrants were required to use did not adequately communicate the material connection with the sponsor and the fact that the pins were made in connection with a contest.
10. Data Security. The string of data breaches affecting Target, Home Depot, and other retailers last holiday season and throughout this year is an important reminder about data security. When collecting information from consumers, make sure that adequate physical and administrative security measures are in place to protect the data from unauthorized access, disclosure, and use. Consider what information is necessary to conduct the particular activity for which it is collected, and limit the amount and type of information that is collected accordingly. Also limit access to employees and vendors who need the information to perform their jobs and contractual obligations and who have been informed about how to handle it.
This list is by no means comprehensive, but it is a good starting point for your holiday promotions that can translate into sound practices all year long.