There is No retweeting from the law

Linda Goldstein Manatt, Phelps & Phillips [email_address] Social Media There’s No Retweeting From the Law

Basics of Promotion Law
Lottery: Prohibited under federal and all state laws
Defined as a promotion containing all three elements:
Prize - Anything of tangible value
Chance - Any random selection of winner/absence of skill
Consideration
Purchase
Payment
Any out of pocket expense except postage/internet
Substantial expenditure of effort
Manatt, Phelps & Phillips, LLP

Basics of Promotion Law
Sweepstakes – Chance based promotion - consideration must be eliminated
Contests - Skill based promotion - consideration may be required if bona fide skill is present and chance has been eliminated
Note: Some states prohibit consideration even for skill contests

Sweepstakes - Eliminating Consideration
The Alternate Method of Entry
Requirements for AMOE:
Must be a “free” mechanism
Must have “equal dignity” with the payment method of entry:
Parallel deadline dates
Equal number of chances to win
Equal odds - No separate prize pools
Universally available to all participants

Contests - Requirements for Bona Fide Skill
The tasks must involve the exercise of bona fide skill
Participants must have the opportunity to exercise the skill
There must be objective criteria by which entries will be judged
Judges must have the expertise to apply the criteria

Social Media Promotions - Key Legal Issues
Does the promotion comply with the lottery/gambling laws
Do the entry requirements constitute consideration
Is an AMOE necessary
Does the promotion comply with applicable third party rules - Facebook/Twitter guidelines
Other unique administrative issues/brand risks
FTC compliance issues
IP issues for UGC promotions

Manatt, Phelps & Phillips, LLP Compliance with Lottery/Gambling Laws- Unique Consideration Issues

Do Entry Requirements Constitute Consideration
In most cases no purchase/payment is required:
Internet Access
Once subject of great debate
No longer deemed consideration even though Internet access fees apply
Opening a Facebook or Twitter account
Liking a Facebook page/Becoming a Fan
Posting photos/updating status
Following the advertiser on Twitter
Retweeting a message

Exceptions:
Blogging about the sponsor’s product
Writing user reviews about the sponsor’s product
Mobile/Text Message charges
Foursquare/QR Codes
Substantial expenditure of effort

Factors to consider:
What/how much personal information is required to open an account
How much time and effort is required
Winner based on most tweets vs. tweet = sweeps entry
Sweepstakes entries for tasks performed online
Is use/purchase of product inherently required
Blogging about sponsor’s product
User reviews
MOST ENTRY REQUIREMENTS CARRY LOW RISK OF CHALLENGE!
BUT SOME OF THESE ENTRY REQUIREMENTS MAY VIOLATE FACEBOOK/TWITTER GUIDELINES

Manatt, Phelps & Phillips, LLP Facebook and Twitter Guidelines

Demystifying the Facebook Rules
All promotions conducted or publicized on Facebook must comply with Facebook Guidelines
Guidelines are continually updated at discretion of Facebook
Last updated May 2011

Demystifying Facebook Rules
Cannot conduct/administer a promotion directly on the Facebook platform
Promotions can only be administered within Apps on Facebook.com on either
A canvas page
An app on the Brand’s Page Tab
Administration means operating any element of the promotion directly on Facebook
DISTINGUISHED FROM PROMOTING OR PUBLICIZING THE PROMOTION ON THE FACEBOOK PAGE

You cannot use a Facebook feature or functionality as an automatic registration or entry mechanism

You cannot condition registration or entry upon the user taking any action using any Facebook features or functionality other than:
Liking a Page
Checking into a place
Connecting to your App
Examples: Cannot condition entry on--
Uploading a photo on your wall
Liking a wall post
Commenting on a photo or wall post
BUT you can require these activities on an APP or on your own Web site

You cannot use the Facebook features or functionality as a Voting mechanism
You cannot notify winners through Facebook
YOU MUST COLLECT EMAIL OR OTHER CONTACT INFORMATION

Required Disclosures: (IN RULES)
Complete release of Facebook
No sponsorship or endorsement
Privacy Disclosure - information is being provided to sponsor and not to Facebook
YOU CANNOT USE FACEBOOK’s NAME, MARKS OR COPYRIGHTS OTHER THAN TO MAKE THESE REQUIRED DISCLOSURES

Other Notable Changes:
Age restriction eliminated but remember COPPA applies
Prohibition on alcohol, dairy, gasoline, drugs, gaming - eliminated - but compliance with local laws applies

Complying with the Facebook Rules: Risk Mitigation
Consider a third party provider- Wildfire
Run the promotion on your own Web site or blog - Only promote on your Facebook page
Note: Disclosure requirements apply even if you are only promoting

Operation Feed Manatt, Phelps & Phillips, LLP

LG Ultimate Jelly Bean Count Contest
Users encouraged to watch video on company’s Facebook page
Consumer’s must like the company’s Facebook page and enter name, email, address and zip code
Prizes awarded to entrants who guess closest to the actual number of jelly beans without going over
Ties broken with a random drawing
Consumers can opt in to receive product information (optional)

LG Ultimate Jelly Bean Count Contest
Key Issues:
Is it a game of skill or chance
Remember: entrants must have the ability to exercise the skill
Chance at any point in the promotion taints entire promotion
Is there consideration
Liking the Facebook page
Opting in to receive customer information
Could be problematic if required
Compliance with Facebook Rules
Liking the page is required in order to enter - not automatic entry
Promotion is administered on a Facebook App
All required disclosures are made

Twitter Guidelines
Discourage the creation of multiple accounts
State in rules that there is a limit of one entry per person/prohibit sharing of twitter accounts
Discourage posting the same tweet repeatedly
Don’t create a contest in which the person who retweets the most wins
Ask users to include an @reply to you in their update
Ensures that you can see all entries
Encourage use of topics relevant to the contest
Content of the tweet and the hashtag should relate

Twitter Promotions: The Disclosure Challenge
140 character limit precludes disclosure of any material terms, rules or privacy policy
Risk Mitigation:
Reference official rules/URL
Tiny URL’s
Abbreviated rules/link to complete rules on Twitter page
Multiple tweets
Include reference to URL/tiny URL in the hashtag

Twitter Promotions: Other Unique Administrative Issues
Rules must specify exact requirements for tweet
Tweet must include the sponsor’s hashtag
Must disclose message and data charges for users who participate via mobile

Case Study: McDonald’s Perfect Pair Contest Manatt, Phelps & Phillips, LLP

Case Study: McDonald’s Perfect Pair Contest
Tweet must include the official rules URL as this constitutes the Pair’s confirmation that they have read and will comply with these official rules
Tweet must include the #McDFSL Pairs hashtag – Use of this hashtag for any other purpose prohibited
Only one Twitter account may be used by each participant
Use of retweets prohibited
Message and data rates apply to those who participate via a mobile device

SPEAKING OF MOBILE: Foursquare
Mobile Meets Social
Location based social networking game
Points/badges earned for “checking in” at designated venues
Check in occurs via mobile phone
Users earn “badges” for checking in
Those who collect the most badges - become the mayor
Badges may be tied to sweepstakes entries

Foursquare Promotions: The Lottery Analysis
Text and data charges incurred to “check in” constitutes consideration
Either prize or chance or must be eliminated or AMOE is necessary:
Novel Issues:
Is checking in the most/earning badges skill
Is being designated the mayor a prize?
CAUTION: If sweepstakes entries are awarded for checking in or earning badges an AMOE is necessary

Other Unique Administrative Issues
Instantly accessible worldwide
Limit to legal residents and those physically present in US
If new technologies are involved, patent issues may apply
Must be prepared for early prize claims - everything is transparent

Other Unique Administrative Issues
Subject to third party rules
Lack of control
Risk Mitigation

Social Media Checklist:
Do the entry requirements involve consideration?
If so, is there an AMOE?
Does the structure of the promotion comply with Third Party Guidelines/Terms of Service
If Facebook is involved, have all required disclosures been included in the rules
If multi-channel, do all entry mechanisms provide equal chances of winning - if not- have differences been disclosed
Is the promotion vulnerable to hacking/or other attacks
Have you reserved strong rights to terminate/disqualify offenders
Are any incentives being offered that could trigger FTC required disclosures?

FTC’s Testimonial and Endorsement Guides
Social media sweepstakes may raise compliance issues under FTC Testimonial and Endorsement Guidelines
Tweets and blogs can be “sponsored” advertising subject to FTC Guides
Offer of a sweepstakes entry can be a “material connection”
Ann Taylor

Refer a Friend Promotions
Offer of a sweepstakes entry in exchange for referral is a “material connection”
Referral email must disclose that sweeps entry is being received
Sweepstakes entry is an “inducement” under CAN- SPAM - CAN SPAM rules apply to referral e-mail

Sponsor connection must be disclosed
Include sponsor# or similar disclosure on blogs and in tweets
Include disclosure requirements in official rules - make it a condition of entry
Do not mandate “positive statements” about your product as a tweet
Endorsements must reflect speaker’s honest opinions and beliefs

UGC Contests
Key Issues:
Lottery issues
IP and other content issues
Unique administrative issues

Lottery Issues
Is it a game of skill or chance
Public judging may negate element of skill
There must be objective criteria
Judges must be qualified to apply the criteria
Does it matter?
Does not affect legality unless consideration is present
May affect registration and bonding
First step: Determine if consideration is present

Is Consideration Present
Factors to consider:
How much effort is involved
Some UGC promotions require “substantial” effort
Will out of pocket costs be incurred
Incidental consideration
Is purchase of sponsor’s product required
THE GREATER THE POSSIBILITY THAT CONSIDERATION IS PRESENT, THE MORE IMPORTANT IT IS TO PRESERVE SKILL LEVEL

Public Judging Concerns
Lack of objective criteria
Popularity contest
Ability of the public to apply the criteria

Maintaining the Skill Level
Establish objective criteria rather than thumbs up/down
Establish criteria public can apply
Audience appeal, humor, entertainment value
Limit impact of public judging
People’s Choice Award
Percentage of score
Factor to be considered

Maintaining the Skill Level
Split judging
Also effective in reducing brand risks
Avoid ballot stuffing
Prohibit robotic/automated entries
Include strong disclaimers to deter violators
Establish scoring system based on ratings rather than cumulative total
If based on # of views, rotate submissions

The IP Content Issues
Brands face potential liability for content of UGC submissions
Copyright
Trademark
Defamation
Privacy/Publicity
False product claims

Risk Mitigation
Try to take advantage of available safe harbors
DMCA
CDA
DMCA - Provides safe harbor against copyright infringement if certain conditions are met:
No actual knowledge of the infringement
Infringement is not readily apparent
Material is immediately removed upon notice
No financial benefit from infringing activity
Designated agent for copyright infringement

Risk Mitigation
CDA - Provides safe harbor against claims for:
Defamation
Privacy
Lanham Act
Publicity
PROVIDED: YOU ARE NOT DEEMED TO BE A CONTENT PROVIDER
Cannot participate in the creation or development of the content

Risk Mitigation
Avoid concepts that “induce” the infringement
Do not take action that will make you a content provider
Include content submission guidelines

Risk Mitigation
Avoid claiming ownership
Take a license only for rights you want and need
all submissions or winner’s only
THINK IT THROUGH AND COORDINATE WITH MARKETING

Risk Mitigation
Reserve strong rights to disqualify and remove materials at any time
If submission will be used as advertising include rules designed to deter false product claims
Screen/monitor/filter

Unique Administrative Issues
Releases: The timing dilemma
Allow sufficient lead time
The bonding dilemma
Note: New York will not accept
Remember: Everything is transparent
Draft rules carefully and precisely
Avoid ambiguities
Follow rules consistently
Others will be watching

There is No retweeting from the law

by Word of Mouth Marketing Association on Aug 26, 2011

Accessibility

Categories

Tags

Upload Details

Usage Rights

Statistics

There is No retweeting from the law — Presentation Transcript