Now the FTC is Going After Cole Haan

Moneybox
A blog about business and economics.
April 2 2014 11:02 AM

Cole Haan Pinterest Shoe Contest Draws FTC’s Ire

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The FTC is not happy with how Cole Haan has been advertising its shoes.

Photo by Andrew H. Walker/Getty Images

The Federal Trade Commission is continuing its war against what it considers to be misleading content from advertisers, and this time Cole Haan is the target.

In a letter sent to a lawyer for Cole Haan on March 20, the FTC issued another warning to advertisers on social media. The bottom line? If your followers are sharing something because of a chance to win money or gifts, then that needs to be disclosed in their posts. Otherwise, it’s deceptive.

Alison Griswold Alison Griswold

Alison Griswold is a Slate staff writer covering business and economics.

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Cole Haan drew the FTC’s ire for a promotional event called the “Wandering Sole Pinterest Contest.” Under the rules of the contest, participants got a shot at winning a $1,000 Cole Haan gift card if they created their own “My Wandering Sole” boards on Pinterest and used them to re-pin five of their favorite images of Cole Haan shoes with the hashtag #WanderingSole.

It sounds pretty basic, and it was. A small crowd of Cole Haan enthusiasts put together colorful boards of their favorite styles and designs, all labeled with some variant of #WanderingSole. But the FTC said not so fast. The agency declared in its letter that Pinterest boards created through the contest “were endorsements of the Cole Haan products, and the fact that the pins were incentivized by the opportunity to win a $1,000 shopping spree would not reasonably be expected by customers who saw the pins.” To the average user, those Pinterest boards might have looked like normal, uniquely inspired content, rather than part of a marketing campaign.

"I would say that this serves as a caution to retailers working in the social media space about the importance of disclosing any potential motivations other than interest," says Ted Mermin, executive director of the Public Good Law Center and a professor of consumer law at UC–Berkeley School of Law, noting that the FTC decided against taking any enforcement action.

Eric Goldman, a professor of Internet and advertising law and director of the High Tech Law Institute at Santa Clara Law, was one of the first to point out the FTC letter in a post on Twitter. He explains that the Cole Haan case is part of a long—and in his mind, losing—battle the FTC is waging on so-called inauthentic content. “The FTC is on the quixotic quest to clean up the Wild West and the FTC is going to fail,” he says.

What the agency is essentially doing, Goldman says, is trying to interrupt and restructure a conversation between a brand and its most loyal followers—who he suspects were the targets of the promotion all along. “The FTC wanted Cole Haan to tell its Pinterest users to label the posts as part of the contest, and then it wanted Cole Haan to go and double check that all of the users had done that labeling,” he explains. “It’s part of the whole phenomenon of the FTC thinking that it can police inauthentic content online.”

In the past, celebrities in particular have run afoul of the FTC for hawking products without disclosing that they were being paid to do so. Kim Kardashian came under fire last May for tweeting a photo of herself using Eos lip balm on her “pregnancy lips.” There was no indication the tweet was paid for, but the New York Times estimated she could have made up to $20,000 for the quick post. The following month, Silicon Valley startup BlackJet admitted that Miley Cyrus had been “given some consideration” for a tweet she posted endorsing the company without any such indication to followers.

“In a traditional ad with a celebrity, everyone assumes that they are being paid,” Mary K. Engle, the FTC’s associate director for advertising practices and author of the letter to Cole Haan, told the New York Times last June. “When it’s not obvious that it is an ad, people should disclose that they are being paid.”

It’s one thing to say that with celebrities who have huge followings and are being paid thousands of dollars to sell a product, but the lines blur when the promoters become everyday users, and they’re not being paid so much as getting the chance to win a prize. After all, there was no guarantee that any of the participants would get anything of value for their efforts. Still, Goldman says if the FTC had its way, anyone being paid or at all incentivized to tweet an ad for a company would also need to put #ad at the very front of their 140 characters.

More to the point, companies like Cole Haan have been holding promotional contests and raffles for years, and surely those have motivated past consumers to talk up a brand among friends and families in the past. Why should it be so different to share that enthusiasm with the people who’ve chosen to follow you on a social outlet? And where does the line fall between reasonable restrictions on advertisers that protect consumers and heavy-handed restrictions on free speech that may or may not?

"This is part of the same general campaign they are engaged in with respect to Kim Kardashian being paid to endorse chapstick," says Mermin. "It's a different piece of it. It's probably closer to the line."

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