Advertising and Promotions in Social Media

October 2013 | practicallaw.com42

Advertising and Promotions in Social Media

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Practical Law The Journal | Transactions & Business | October 2013 43

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.

GONZALO E. MONPARTNERKELLEY 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.

Author

S ocial media has revolutionized the way that companies advertise and market their goods and services. Using social media, com-panies 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.


October 2013 | practicallaw.com44 Practical Law The Journal | Transactions & Business | October 2013 45

This article examines key issues for companies to consider when advertising in social media, including through consumer endorsements and testimonials, and running a contest, sweep-stakes 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 DISCLOSURESTwo 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 CLAIMSAdvertisers must have a reasonable basis to support all ob-jective 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 interpre-tation, 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:

�� The type of product.�� The 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).)

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 com-pany 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 DISCLOSURESIf 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



Federal Trade Commission (FTC), the NAD and other regula-tors 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 place-ment. 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:

�z close to the claim they modify; and�z 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 me-dia, 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.

ENDORSEMENTS AND TESTIMONIALSOne 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 per-tain 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 investiga-tions 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 ENDORSEMENTSAccording to the FTC, a statement made by a consumer in social media will be treated as an endorsement if, viewed objec-tively, it appears that the relationship between the advertiser and the speaker is of a type that the speaker’s statement can

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.



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 endorse-ment 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 be-tween 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 ENDORSERSAdvertisers 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 con-cern, 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 en-dorsers could greatly expand the scope of content for which advertisers are responsible.

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 lo-tion’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 advertis-ers 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 appropri-ately disclosed their connections to the companies that are marketing and selling the endorsed products.

DISCLOSURE OF MATERIAL CONNECTIONSThe 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).)



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 collec-tion. 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 fol-lowing 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

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:

�z Hyundai did not know about the incentives;�z only a small number of bloggers were involved; and�z 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 ad-vertising 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 develop-ers. 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.

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 Advertising Law in the US

��Sales Promotions, Contests and Sweepstakes

��Advertising Agreement

��Cause-related Marketing by For-profit Companies Checklist

��Mobile Marketing: What Companies Need to Know

ADVERTISING AND MARKETING TOOLKIT



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’ ACTIONSFTC 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

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 ad-vertising 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 SWEEPSTAKESCompanies frequently market their products and services through contests, sweepstakes or other types of promo-tions. 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 pro-motions. 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



engagement can create problems for the company running the promotion.

LEGAL REQUIREMENTSWhen running a contest, sweepstakes or other type of promo-tion, 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 LawsMarketers often use the words contest and sweepstakes interchangeably. However, these terms refer to different types of promotions that can be subject to different legal require-ments. 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 promo-tion 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.

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 as-sume that a third party got it right or that its disclosures apply to a different promotion.

In addition to disclosure requirements, some states may re-quire 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 LawsOther 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 REQUIREMENTSIt 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 plat-form 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.



Facebook Promotions GuidelinesThe 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 admin-istered 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 dis-closures, 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 GuidelinesTwitter 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 promo-tion 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 GuidelinesPinterest 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.

Other PlatformsOther 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 CONTENTMany 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

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:

� z addressing problems quickly to prevent bad news from spreading;

� z taking down a problematic post; or

� z admitting 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.

Planning Promotions in Social Media



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 sub-missions 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, peo-ple 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-1710-VLB, 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 con-tent, 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 PROBLEMSMany 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.

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Advertising and Promotions in Social Media

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