July 30, 2015

sweepstakesThis May, the Federal Trade Commission (the “FTC” or “Commission”) answered a number of Frequently Asked Questions concerning the FTC’s Endorsement Guides. The Commission’s updated FAQ addresses one such question about hashtags used by sponsors as part of a social media sweepstakes or contest.

Which hashtags should marketers avoid?

Social Media Sweepstakes and Contests

We have frequently written about the marketing benefits – and regulatory risks – associated with the use of promotional contests and sweepstakes.  Many of these promotions require entrants to take some action to promote the respective sponsors’ brands, products and/or services as a condition of participation.  The advantage of such an approach to the advertiser should be obvious: by requiring consumers to promote a given product in order to enter a sweepstakes or contest, the advertiser is able to capitalize on a widespread, grass-roots marketing effort involving authentic, word-of-mouth recommendations from consumers rather than more mundane marketing methods.

Such promotions have become increasingly popular on social media platforms, which provide sponsors with a low-cost and effective means to increase the number of participating consumers. Examples of consumer participation in social media sweepstakes include submitting a positive testimonial, publishing brand names/images on a social media website and taking other actions on social media such as “liking” those sponsors’ Facebook pages.

FTC Endorsement Guides FAQ

The May 2015 update to the Commission’s Endorsement Guides FAQ addresses social media sweepstakes or contests that require participants to send a Tweet or otherwise make a post with a designated hashtag (e.g., #AcmeRules for an Acme Widgets promotion) in order to enter.

The FTC determined that many such promotional hashtags, including the example provided above, do not adequately notify readers that the posts were incentivized by the ability to enter a promotion. The Commission reasoned that many readers would not understand such a hashtag to mean that those posts were made as part of a social media sweepstakes or contest, or that consumers were posting the hashtag in exchange for a chance to win a prize.

The FTC’s FAQ provides examples of how – and how not – to use hashtags for social media sweepstakes:

  • GOOD: Making the word “contest” or “sweepstakes” part of the hashtag (e.g., #AwesomeAcmeContest).
  • BAD: Shortening the word “contest” or “sweepstakes” in a way that people might not understand (e.g., #AcmeWidgetSweeps).

Social Media Marketers: Mind Your P’s, Q’s and #’s

Marketers should be mindful of the rules governing promotions that are run, in whole or in part, through social media sites like Facebook, Twitter, Instagram, Pinterest and others. Sweepstakes and contest sponsors must ensure that their promotions are compliant with FTC regulations, as well as the many rules governing the use of social media websites, or risk regulatory investigation and other legal action.

If you are interested in learning more about this topic or pursuing a sweepstakes-related venture, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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Related Blog Posts and Publications:

Sweepstakes Endorsements and Testimonials: What’s Not to Like?

Facebook Issues New Rules for Mobile App-Based Sweepstakes Entries

Intellectual Property Concerns for Sponsors of Promotional Contests and Sweepstakes

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