That Instagram contest you just entered to win free merchandise may be a violation of the FTC Guidelines! The FTC Endorsement Guidelines state that it is deceiving to have individuals participate in a contest for a chance to win without disclosing they are doing so.
In 2014, Cole Haan launched an Instagram contest that asked followers to create a Pinterest board and pin 5 photos using the hashtag #WanderingSole. Doing so entered each individual in a contest to win a $1,000 shopping spree. The FTC was quick to act and sent the retailer a warning letter. The letter stated that Cole Haan’s #WanderingSole was an insufficient disclosure and because Cole Haan did not require people to disclose that they were entering a contest, the posts violated the FTC Guidelines. The FTC acknowledged that it had never specifically addressed social media contests so they did not fine Cole Haan. Instead they asked Cole Haan to require disclosure that the posts were part of a contest. However the new FTC Guidelines released in 2015 specifically discussed social media, giving retailers no excuse to not disclose properly in the future.
Last year, Versace decided to launch its own contest to promote its Greca Stars sunglasses. The contest asked consumers to take a selfie with the Greca Stars sunglasses in select Versace boutiques worldwide and post it online with the hashtag #VersaceSelfie or to “like” pictures of Donatella Versace wearing the Greca Stars sunglasses on the Instgram profiles @VersceHomeWW, @DVHomeMilan and @VersaceBoutiques in order to win a free pair of Greca Stars sunglasses. Similar to Cole Haan, Versace did not require participants to disclose that they were participating in a contest with a chance to win a free product, which is in direct violation to the FTC’s 2015 Guidelines. Versace did include the hashtag #Contest in its own Instagram posts about the contest, but according to the Guidelines this is still an insufficient disclosure. The FTC could potentially fine Versace half a million dollars, but has yet to decide whether to take action. I hold that Versace has NOT mastered the art of disclosure!