When you think of great resources to learn about promotions laws, you think (we hope) of Ad Law Access, but you might not think of Food Network Magazine. However, the magazine recently ran a story entitled “Half-Baked Law” about a legal issues associated with a baking contest.

According to the story, New Jersey resident Sally Ball tried to enter her mom’s apple pie recipe in the American Pie Council’s National Pie Championship, but couldn’t compete because an old law in the Garden State considers certain cooking competitions to be illegal gambling. State lawmakers heard about this, and the General Assembly voted to change the law in May. Now, the bill is in the State Senate’s hands.

This should serve as a reminder that promotions laws aren’t always intuitive and don’t always make sense. Even things as seemingly innocuous as a baking contest could run afoul of gambling laws.

Good luck, Sally. We’re rooting for you.

Last week, Pinterest added promotions guidelines to their Acceptable Use Policy. According to a post announcing the change, Pinterest will no longer allow promotions that:

  • Suggest that Pinterest sponsors or endorses them or the promotion
  • Require people to Pin from a selection (like a website or list of Pins)
  • Make people Pin the contest rules
  • Run a sweepstakes where each Pin, board, like or follow represents an entry
  • Encourage spammy behavior, such as asking participants to comment
  • Ask to vote with Pins, boards or likes
  • Require a minimum number of Pins

Some of these tactics are currently very common in Pinterest promotions. If you’re doing any of these things, now’s the time to rethink your approach. Pinterest has already indicated that if they see companies doing these things, they will shut down the offending promotions. (And if you run promotions on Facebook, make sure you read our post on the recent changes to Facebook’s promotions guidelines.)

 

Yesterday, Facebook made it easier for companies to administer sweepstakes, contests, and other promotions on its platform. Previously, Facebook required that all promotions on the platform be administered through apps. Now, promotions may also be administered on Page Timelines. For example, companies can now:

  • Collect entries by having users post on the Page or comment/like a Page post
  • Collect entries by having users message the Page
  • Utilize likes as a voting mechanism

As before, however, companies cannot administer promotions on personal Timelines. And companies must include Facebook in their release language and acknowledge that the promotion is in no way sponsored, endorsed or administered by, or associated with, Facebook.

There may be cases in which using an app makes more sense, but at least companies now have more options. 

Last year, the FTC came up with a new strategy in its war against unlawful telemarketing — the agency sponsored a contest in which it invited contestants to submit their best solutions to block robocalls. After reviewing almost 800 entries, the FTC announced the winners in April. If the winning solutions get implemented, that could mean good news for consumers. But not everyone is happy. According to The Wall Street Journal, one of the entrants who didn’t win is threatening to sue the FTC.

The entrant first asked the FTC for his entry’s grade, but the Commission declined to provide it. Then, he filed a FOIA request for the scores of all entries. The FTC provided score sheets for the seven finalists, but the entrant wasn’t among the finalists. Then, the entrant tried to get more information from one of the judges. When that didn’t work, he filed a complaint with the U.S. Government Accountability Office. And now, he’s considering a lawsuit.

Contests can be a great way for companies to get creative ideas. But entrants get protective of their entries, and frequently complain (and sometimes threaten legal action) if they lose. Indeed, my dog recently won Best in Show in Kelley Drye DC’s first Take Your Dog to Work Day. Rest assured that, if she hadn’t, I would have sued the office managing partner.

Before you run a contest, take some time to think about how things can go wrong, and make sure you have provisions in the rules to protect your company. But even that may not stop complaints from disgruntled entrants. In those cases, your legal, marketing, and PR teams should work together to find the best way to make the problem go away as quietly as possible. 

All states prohibit companies from requiring people to pay money or make a purchase to enter a sweepstakes. Although most states allow companies more flexibility to require a payment or purchase in a skill contest, some states prohibit those requirements, too. Up until now, Vermont was in the latter category.

Effective April 26, 2013, nothing in the Vermont statute “shall be construed to prohibit a person from requiring or paying any kind of entry fee, service charge, purchase, or similar consideration in order to enter, or continue to remain eligible for, a game of skill or other promotion that is not based on chance.”

The line between chance and skill isn’t always clear, but if companies can get on the right side of that line, they’ll soon have more options for running promotions in Vermont.

As we’ve noted in previous posts, if a company provides incentives to a consumer in order to encourage the consumer to promote the company’s products, the consumer is required to disclose those incentives. It’s not just the consumer’s problem, though. The FTC has stated that a company can be held liable for a consumer’s failure to make the disclosure. Fortunately, though, there are easy steps that a company can take to protect itself in case consumers don’t comply.

The FTC recently investigated a promotion conducted by Nordstrom to promote the opening of a new store. Nordstrom provided social influencers with gifts and failed to tell the influencers that when they wrote about the event, they should disclose they had received gifts. After reviewing the promotion, however, the FTC decided not to pursue the case for a few reasons. First, the FTC noted that several influencers who posted content did disclose that they had received the gifts. And, second, Nordstrom revised its social media policy to address the FTC’s concerns.

This case serves as a reminder that companies who engage in social media should have a policy that provides endorsers with guidelines about what they can, can’t, and must do. It’s not just enough to have the policy in place, however. Companies must also monitor to ensure endorsers comply with the policy, and take action against those who don’t.

In March, we posted that Pinterest had made changes to its Terms of Service. This month, Pinterest announced new business accounts that are governed by new Business Terms of Service. Pinterest also established Logos, Trademarks, and Marketing Guidelines. Among other things, these Guidelines provide some do’s and don’ts for growing number of companies that run promotions on the platform.

Pinterest also reminds companies that they are responsible for ensuring their promotions comply with applicable laws. As we’ve noted before, not only do companies have to worry about promotions laws, they also need to think about the fairly unique intellectual property issues that can arise on that platform.

Mobile marketing, sweepstakes and services, including location-based services, are governed by an alphabet soup of statutes and regulations: TCPA, COPPA, CAN-SPAM, CPNI, etc. To complicate compliance even further, numerous class action lawsuits in state and federal courts have addressed issues and nuances that the Federal Communications Commission, Federal Trade Commission, and state regulatory agencies or legislatures have not.

On November 16th, Kelley Drye held a webinar which discussed the new rules of the road for mobile communications, marketing, and sweepstakes, and offered suggestions for reaching consumers while mitigating the legal risks.

Click here to download the slides from the webinar and click here to watch the recording.

Last year, a CBS radio station in North Carolina ran a “Carolina Cuties” contest in which listeners were invited to submit pictures of their babies on the station’s website. The grand prize winner was be determined by public votes. Although broadcast announcements for the contest stated that voting would end on September 5, 2011, the station’s website and e-mails to the finalists stated that voting would end by September 4, 2011. One of the contestants complained to the FCC about the discrepancies.

The FCC requires broadcast licensees to disclose the material terms of their promotions — including when and how winners will be selected — and to conduct their promotions substantially as advertised. The agency wasn’t persuaded by the station’s argument that the discrepancies were due to inadvertent errors, holding that inadequate oversight of staff does not excuse a failure to run the promotion as advertised. The agency also rejected the station’s argument that the errors did not put any consumers at a disadvantage. Instead, the FCC noted that there was a potential for harm, and that a showing of actual harm is not necessary in determining whether a violation occurred. Accordingly, the FCC proposed a fine of $10,000.

This case demonstrates that companies can be held responsible for discrepancies between how they advertise a promotion and how the promotion is actually run. If you are running a promotion, make sure that your rules and marketing materials are in sync with how you actually run the promotion.  

The Washington Attorney General recently announced that a settlement with RealNetworks over the company’s free trials. According to the AG, more than 500 consumers had complained to the AG’s office and the Better Business Bureau about unauthorized charges for services they had never ordered. In many cases, consumers who signed up for free trials did not realize they would automatically be charged unless they canceled before the end of the trials. Many consumers also claimed they had a hard time canceling the services.

Under the settlement, RealNetworks is required to: (a) stop using pre-checked boxes to obtain consent for purchases; (b) clearly disclose the terms of any free-to-pay trial; (c) provide an online method of cancellation; (d) send reminders to consumers with cancelation instructions; (e) process cancellation requests within two days; and (f) inform consumers who called to cancel a subscription of additional subscriptions on their account. The settlement also provides for a $2 million claims-based pool to provide restitution for consumers and requires RealNetworks to pay $400,000 in attorney’s fees.

As we’ve noted before, regulators closely scrutinize free trials in which consumers are required to cancel in order to avoid charges. If you offer a free-to-pay trial, make sure you clearly and conspicuously disclose the material terms of the offer — including any obligation to cancel — before consumers sign up. You should also consider having consumers affirmatively check a box to indicate they agree to the terms.