Sweepstakes Sponsors Take Note – Remedial Steps Can Save the Day
The Scotts Company, LLC, a leading provider of home and garden pest control solutions, ran a sweepstakes where consumers were invited to review — good or bad — a Scotts product for a chance to win a $25 gift card. We assume there was also a no-purchase-necessary way to enter because that wasn’t the subject of the challenge here. The Official Rules for the sweepstakes required that all reviews must include the disclosure “Sweepstakes entry” in order to be eligible to qualify for the random drawing. However, the call-to-action email announcing the promotion to consumers and the template review made no mention of the requirement. The email did, however, provide a link to the Official Rules.
According to the National Advertising Division complaint filed by a competitor in United Industries v The Scotts Company (Case No. 5889 Oct. 5, 2015), hundreds of favorable reviews appeared on the Scotts website within a few days after the sweepstakes was announced, but none of them disclosed the material fact that the reviews were submitted as part of a sweepstakes entry. Such a disclosure is required by the Federal Trade Commission’s Guides Concerning the Use of Endorsements and Testimonials in Advertising.
Responding to the NAD, Scotts indicated that once it became aware that consumers were not following the Official Rules, it took a number of remedial actions. First, Scotts went ahead and tagged an initial set of reviews from the first days of the sweepstakes period with the notation “Sweepstakes entry.” It also ensured that the tags traveled with the reviews to all participating retailer websites. Additionally, Scotts included a mention of the disclosure requirement in subsequent call-to-action emails to consumers about the promotion. When consumer were still failing to include the disclosure, Scotts tagged more reviews and included a prominent disclosure on the review portion of its website that reviews posted after the date of the giveaway may have been submitted as part of a sweepstakes.
NAD said it was concerned that the original call-to-action email did not advise consumers of the required disclosure and concluded that “[s]imply including the disclosure requirement in a link containing the Official Rules was not effective because, prior to Scotts’ remedial actions, few of the reviews which were posted on the Ortho website or re-posted on retailer websites included the required disclosure.” However, NAD was satisfied that Scotts took the proper remedial steps to fix the lack of disclosures once it became aware of the problem. NAD therefore concluded that Scotts’ “steps to disclose the material connection between the endorsers and the advertiser were sufficient and proper.”
Interestingly, NAD dodged the question of whether sweepstakes sponsors like Scotts should be required to have consumers identify the sponsor of the sweepstakes in their “Sweepstakes entry” disclosure. The challenger in this case argued that “without this information, consumers may think that
a third-party or the retailer sponsored the sweepstakes – as opposed to the brand – which could change their assessment of the credibility of the review.” In deferring the decision on this issue for another day, NAD noted the FTC’s decision in the Cole Haan matter where it concluded that social media sweepstakes entries using hashtags should include a disclosure, did not address this important policy question.
The Scotts decision serves as a useful reminder of the disclosure requirement for online sweepstakes entries and also shows that NAD may factor in good faith, voluntary remedial steps undertaken by advertisers in its ultimate rulings in advertising disputes.
