Tag Archives: FTC

Breaking Down The FTC’s 91 Letters About Social Media Endorsers

The FTC showed that they were taking social media endorsements seriously when they sent a series of 91 letters warning brands and endorsers alike about the need for disclosures.  45 letters were sent to brands and the remaining 46 letters were sent to the individual endorsers who posted on Instagram.  The sheer number of warning letters, 91!, coupled with the FTC showing the form letter they will use for future violations signals this issue will likely come up again for brands and organizations who aren’t following the Endorsement Guides.

The National Law Journal submitted a Freedom of Information Act request to obtain copies of all the letters and they were successful.  I read through all 91 letters to see if there were any interesting tidbits and I’ve summarized the results so you don’t have to do the same.  Enjoy!

Product categories

Four main categories make up the majority of the 45 warning letters, with some significant overlap between some of those categories.  I broke down the products into the following categories and distinguished between them as follows:

  • Beauty – 14 letters.  Products that are marketed towards changing your appearance without some associated health benefit (which would put it in the Health category).  Admittedly, some of the products are difficult to classify between Beauty and Health.  Cosmetic goods like eyeliner fall neatly into a Beauty category, but what about a product that claims to give your body the vitamins it needs specifically so your hair doesn’t break in the winter?  I erred on the side of any health-related claim, no matter if it has clinical support or not, went into Health.  So these 14 letters, still the most of any category, are only products that make no health-related claims.
  • Fashion – 10 letters.  Clothes, shoes, and accessories.  Also includes subscription boxes that primarily have products in this category.
  • Health – 9 letters.  Products whose primary purpose is to impact your health or who make some kind of health-related claim.  Includes external health products (blister bandages), internal health (vitamins), or items that could also be considered Beauty products but are using some kind of health claim (Flat Belly Tea and Flat Tummy Tea, both have a primary Beauty purpose but use marketing around giving you more energy…I’m not making a judgment on the veracity of those claims, just how to categorize them).
  • Food – 9 letters.  Food and beverage products including subscription boxes with food products.  I also included alcohol in this category–not because I consider them food but because they are consumable goods most similar to food.  If you want to break it out then there was a single vodka product in the 45.
  • Gadgets – 1 letter.  There was a single gadget product (a hoverboard) that didn’t fit into the other categories and seemed different enough from Toys.
  • Toys – 1 letter.  There was a single toy (My Little Pony) that received a letter.
  • Retail – 1 letter.  There was a single letter to Cabela’s, an outdoor/hunting/fishing focused retailer.  The picture featured a celebrity in front of dozens of fishing poles, none of which are easily identifiable as to brand, but beneath a large sign showing the store was Cabela’s.

What to take from these data: Certainly if your brand operates in one of the categories then the FTC has shown it is potentially looking at your endorsements.  But the intentional inclusion of three categories with just a single letter is, I think, an obvious shot across the bow warning everyone that any endorsement may be scrutinized by the FTC.

Endorser engagement

To look at engagement I only looked at the number of likes or hearts (since all the posts were on Instagram) that the posts received by the time the FTC printed them to include in the letters.  While posts also received comments, those are both a more substantive form of engagement that could require further classification and, frankly, I don’t have that kind of time.  But more importantly, Instagram posts prominently show the number of Likes/Hearts a post receives while the callout for the number of comments is both lower, smaller, and in a more subtle font color than the simple engagement count.

Individually, there was a large range of endorser engagement for the posts targeted by the FTC.  The highest single engagement in a post was a video that was viewed 1.4 million times (videos on Instagram have their views displayed most prominently, Likes/Hearts are buried lower in the description for videos than for pictures).  The highest non-video engagement belonged to Jennifer Lopez for her post about Beluga Vodka (631,000).  The lowest engagement on a targeted post Belonged to Farrah Abraham for her post about TeeSpring, a t-shirt printing company (1,550).  This shows the FTC was considering a broad range of posts in terms of how effective they were in engaging with customers.  Overall, the numbers were considerable at the category level (note that some letters included multiple posts which were used for the average calculation rather than just the number of letters received):

  • Beauty Total Engagement: 2,280,364.  Average Engagement: 142,523.  If you removed the video that received 1.4 million views from this calculation (the only video post in all the FTC letters) then the total engagement drops to 880,364 and the average drops to 58,691–those numbers would significantly drop the Beauty category in these rankings.
  • Fashion Total Engagement: 1,844,686.  Average Engagement: 141,899.
  • Food Total Engagement: 1,656,756.  Average Engagement: 165,676.
  • Toys Total Engagment: 501,000.  Average Engagement: 501,000.
  • Health Total Engagement: 170,791.  Average Engagement: 17,079.
  • Retail Total Engagement: 85,800.  Average Engagement: 85,800.
  • Gadgets Total Engagement: 28,400.  Average Engagement: 28,400.

I chose to rank the product categories above in order of total engagement.  If they were ranked by average engagement then Toys would have easily led the pack.  I’m not sure if that’s the subject matter (My Little Pony is popular, after all) or the category itself.  The individual who endorsed My Little Pony, Vanessa Hudgens, is one of the few who received a warning from the FTC for multiple posts–her other endorsement for Graze Snacks only gained 269,000 Likes/Hearts, so there is something to be said for My Little Pony’s draw.

What to take from these data: The difference between the number of letters sent to brand categories versus the total and average engagement received shows that the FTC is looking at a wide variety of effectiveness when it comes to Endorsement Guideline enforcement.  Using high-profile endorsers or a series of less well-known endorsers can equally draw the FTC’s attention.  Bottom line: if your brand is considering engaging an endorser than you are probably hoping for more engagement than the minimally engaged post in the FTC’s letters (1,550); meaning you are potentially in the crosshairs.

Attempted Disclosures

The vast majority of posts the FTC took issue with made no attempt whatsoever to disclose a relationship between the endorser and the brand.  Of the 45 brands that received complaints, only 11 of them had some attempt to disclose that relationship, yet none of them were sufficient to avoid receiving the FTC letter.  The FTC has not expressly blessed any form of disclosure, the closest they have come is saying that starting a post with “#Ad:” may be sufficient.

The FTC’s form letter, customized for each violation, calls out that disclosures need to be “clear” and “conspicuous” (FTC quotes, not mine).  The FTC says this standard is met by making the disclosure unambiguous and it should stand out.  Since social media platforms such as Instagram don’t allow for text formatting, the ability for a disclosure to stand out largely depends on its placement and the context of the entire post.  That became one of many contextual elements called out by the FTC.  In a few instances noted below, the FTC added to the form letter to address attempted disclosures as inadequate.

Examples of inadequate disclosures:

  • “Thanks…”  Five of the complained about posts did contain some form of thanking the brand.  The FTC called these out as being inadequate since a satisfied customer might equally thank a brand–just a thank you to the brand did not communicate that the endorser was being paid in money or products in exchange for the post.  The FTC also noted no difference between text that thanked the brand by tagging them or just by using their name.
  • Disclosure outside visible space.  Every letter sent by the FTC mentioned that a consumer shouldn’t have to click the “More…” link to read text that couldn’t initially be loaded in order to see a disclosure.  One example violation, Shea Moisture, had so much text that the screenshot couldn’t capture all of the text–it is unknown if that post had any disclosures by the end of the text.  The standard text the FTC put in their letter mentions the first three lines of an Instagram post being visible for mobile users, strongly suggesting that’s where the FTC would like to see those disclosures.
  • “Partner.”  In two of the Instagram posts, the term #Partner (or a brand specific #fffpartner) were used in a post.  The FTC said that this hashtag is insufficient to convey that the post was sponsored.  The FTC recommended the hashtag #Compeed_Partner (that’s how they spelled it, so I think they meant #Comped_Partner although it’s interesting to note the FTC thinks “Comped” is sufficient to communicate “Compensated”) as one “more effective” option (note they did not explicitly say it would be enough, just better than what was done).  In the example of #fffpartner, the FTC suggested that “FabFitFunPartner” would be “clearer” (bringing up the same caveat as with the “more effective” option).  It is also interesting that the FTC lists a hashtag with a brand name and partner as a potential option even though that doesn’t include a specific call-out about pay/compensation.
  • Multiple hashtags.  The FTC also called out when disclosures are made surrounded by other hashtags or tags.  One example post, by Scott Disick for Pearly Whites (teeth whiteners), ended a paragraph of text accompanying his photo with the URL to the product’s website, the hashtag #nosensitivity, the disclosure hashtag #ad, and ending with another tag of the sponsoring brand’s Instagram account.  The FTC noted that the attempted disclosure here may be obscured by putting it at the end of the text and in the middle of multiple hashtags and mentions.
  • #sp.  This abbreviation for “sponsored” is likely not to be understood by consumers according to the FTC.
  • Employment and ownership.  While being paid for an endorsement is an obvious material connection to the sponsor thereby requiring a disclosure under the Endorsement Guidelines, other material relationships can exist without being explicitly paid for.  One such material connection is if you are the owner of the brand, as the FTC pointed out in their letter concerning Sean Combs’ AQUAhydrate post, a bottled water company in which Mr. Combs is a part owner.  With other FTC actions addressing employee disclosures in social media posts (the Playstation Vita case), it is clear that the FTC considers employment and ownership worth of disclosing in posts about that brand.
  • “My friend…”  Although not expressly called out in a letter customization, one post in the batch attempted to reference the sponsoring brand as being a friend of the endorser.  This was insufficient as a disclosure.

What to take from this: The FTC has still never provided a clear way to disclose an endorsement. They have, instead, taken shots at attempts to disclose and have hinted at various techniques that might be more effective at disclosing a relationship, but nothing so concrete as “If you say X then you have met your obligations under the Endorsement Guidelines.”  These letters still don’t get us to a place where brands know exactly what to do, but we’re getting closer by knowing what methods are not sufficient.  If your disclosure program isn’t exceeding these complained-about tactics listed above then you need to up your disclosure game.

Perceived Endorsements

One post in the batch of letters caught my attention in the list.  The FTC sent letters to both the Dunkin’ Brands Group (owner of Dunkin’ Donuts) and Heidi Klum over the following post (poor quality because grabbed from the PDF):

I thought the inclusion of this post was a bit strange because I wasn’t sure if it was an actual endorsement.  Yes, Ms. Klum is sitting behind a very obvious cup showing the Dunkin’ Donuts marks.  But she is doing so because the picture was taken on the set of America’s Got Talent (AGT), a talent competition show with which I am familiar mostly because my 11-year-old son loves it.  Dunkin’ Donuts sponsors the cups that sit on the judges’ table during episodes–in previous years the cups have been sponsored by other brands.

While it is entirely possible that Dunkin’ Donuts, in addition to whatever deal they made with the AGT producers for cup branding, also made a deal with Ms. Klum for her to post this picture.  It is also possible that Ms. Klum, in the middle of doing a job that she has posted behind the scenes photos from in the past, just did another picture and took advantage of the fact that most fans of the shows would recognize the cup and know that she was on set (which can also be made out in the background, although not easily).  The text accompanying this original post, “Guess what I am doing today,” makes no mention of the Dunkin’ brand or even something tangentially related to the beverage itself.

Ms. Klum responded to the FTC letter by taking down the original picture and posting this cropped version with a new, telling caption:

“This is NOT a sponsored Dunkin Donut post … and I did NOT get paid for this!!!” You can tell she’s serious because it has three exclamation points.

What to take from this: When it comes to social media influencers and celebrities, any inclusion of a brand could raise the suspicion of a paid-for endorsement.  There’s little you can do from the brand perspective to prevent these kinds of posts (in fact, you’re not so secretly hoping you get them) but to avoid upsetting the FTC it would be an excellent idea to have a strong disclosure program for the endorsements your brand does pay for.  Then when the rare unpaid, innocent endorsement comes along you can point to your existing program as support for your claim that this was not the kind of post that requires a disclosure.

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Filed under Celebrities, Commercial Activity, FTC Endorsement Guidelines, Instagram, Social Content, Social Marketing

Wish I Was Legal

It’s a movie.

I’m a social media law geek.  I have long accepted this fact and it shouldn’t be a revelation to you since you’re, you know, reading a blog about social media law.  So nobody should be surprised that when I attended a movie premiere for Wish I Was Here last week and everyone took out their smartphones to take pictures of Zach Braff and Donald Faison I, instead, took pictures of the disclosure form and privacy warning.  Because I’m geek like that.

I was a backer of Mr Braff’s Kickstarter campaign and paid to get two tickets to the Austin premiere and Q&A session.  I am not a superfan of Mr. Braff–I thought Garden State was okay and I only watched a season or two of Scrubs–but I do think he’s a talented actor and saw him perform in Twelfth Night at Shakespeare in the Park.  I was also intrigued by the Kickstarter project, being the first high publicity original movie to be funded after Veronica Mars.  I sent my money, read the updates, and watched the backlash roll in with curiousity.

There were four items of interest that struck me regarding social media law at the movie premiere.  I’m going to tell you three of them.  Just kidding, here’s all four.

photo 11. The release form

I’ve enclosed a picture of the consent and release form that all attendees were required to sign prior to entering the theater.  Much of it is standard for a movie screening where filming will take place if they may use the footage for behind the scenes featurettes.  But the item that jumped out to me is the item IN BOLD ALL CAPS.  Because, you know, that’s what bold all caps is supposed to do.

That text reads

I agree that to the extent I make any statements about the content including via social media or other public forums (e.g. Facebook, Twitter, Blogs, etc.) that such statements (“Statements”)…IF THE STATEMENT IS MADE ON SOCIAL MEDIA OR ANOTHER PUBLIC ON-LINE FORUM, I WILL DISCLOSE NEXT TO MY STATEMENT(S) THE MATERIAL CONNECTION BETWEEN MYSELF AND FOCUS FEATURES (I.E. I SAW THE PICTURE FOR FREE AT AN ADVANCE SCREENING

This statement is for participants to comply with the FTC Endorsement Guidelines.  They’re even explicitly called out in the next sentence of the release but they aren’t IN BOLD ALL CAPS so you might have missed it.

That’s a great call-out for such a long release form.  It may be the only sentence you actually read if you’re handed this page and given a minute to sign before getting out of the hot Texas sun into the air conditioned theater.  Although I may quibble with some technicalities (I paid for the tickets via Kickstarter so it wasn’t free, and I paid Zach Braff’s group not Focus) I’m a professional quibbler so I’m willing to focus on the positive.  A good call-out for a venture they know will get mentioned on social media.

photo 22. The consent sign

This sign was posted inside the theater before you could get to the orchestra seating and visible from the stairs leading to the balcony.  While I understand the need for something like this, heck I’ve drafted a few in my career, I also think this sign goes a bit overboard.  First, the release was already in the signed form that everyone had to fill out before they got inside so this is duplicative at best–but as a lawyer I can appreciate having multiple points where consent was gained just in case a lawsuit comes up (especially after DVDs have been produced).

I take less issue with the repetition than I do with the scope–while the signed form seems more targeted in the consent, this poster goes a bit overboard.  Sure, it’s easier to print a sign with less language like YOU GIVE ME ALL THE RIGHTS! RAWR! it also goes beyond the scope of the event.  According to this sign, Focus Features can now use my photograph to publicize an entirely different movie or event and that doesn’t help anyone.

I don’t think Focus would use my photo to publicize a different movie, mostly because I thoroughly enjoyed Reign of Fire and therefore have horrible taste in movies, but also because this is more likely just a defensive consent.  If someone were to sue for being on the DVD then the company has a signed release form and this poster to use in their defense.

Still, even though I may be the only person who read this sign (and definitely the only one to take a picture of it), I have to wonder what would happen if someone took issue with the consent.  I paid for the tickets to the premiere–that’s what the Kickstarter event promised me.  There is some general language in the Kickstarter campaign that if a reward conflicts with laws they’ll work to give you a substitute, but it isn’t a conflict of law for me to attend without giving consent to filming.  Just a small thought–perhaps they had a special area reserved for non-consenting audience members or they figured the odds were so low of this being an issue it wasn’t worth developing a plan.  I just find that kind of thing interesting.

3. The backlash

During the Q&A session after the film, one man asked Mr. Braff if he experienced any backlash over the funding.  The response was along the lines of “Where have you been?  Did you contribute and then go off-line for a year?  Did you just land from the space station and thought, ‘Hey, I can still make the premiere!'”  It was funny and the audience’s reaction showed they were all aware of the backlash as well.

The answer was interesting as well.  Mr. Braff explained how his world is all about getting films financed and when something is your world you unrealistically expect that other people will know something about that world.  So when the backlash started rolling in about the Kickstarter project he suddenly realized that people didn’t really understand how films are financed and why Kickstarter could help him.  So that was a lesson learned, but ultimately something he wasn’t concerned about since his fans and other interested parties did back him and that mattered more.

Mr. Braff did express some concern over the backlash regarding Kickstarter itself–specifically that people attacked him for taking money away from other Kickstarter projects that could use the money more.  He said that Kickstarter was quiet at first but later spoke up saying that high publicity projects like this do draw attention to the platform and ultimately bring in new users who end up funding more projects–the net being more money shared with more projects.  I can’t find a link to Kickstarter’s statement but that makes sense and is also probably a lesson learned for future high publicity projects.

4. Reflecting on the social world

At the end of the Q&A session, Mr. Braff and Mr. Faison sang “Guy Love” as a special treat to the audience.  They said it had been a while since they performed it and don’t get a lot of opportunities to sing it together so everyone should record it.  And so they did.  This was my view of the song:

photo

Working in social media I often take for granted the world of information and connections we have at our fingertips.  But every once in a while it strikes home.  When I looked at the event before my eyes I wasn’t watching the stage, I was looking at all those phones.  Yes, in my head I realized everyone probably has one, but it takes events like these for that to sink in sometime.  Seeing everyone recording the event, having their own perspective and building their own memories and being able to share it with all of their friends as well.

That’s awesome.  That’s social media.

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Filed under Celebrities, Copyright, Crowdfunding, FTC Endorsement Guidelines, Social Investment, Social Platforms, Terms and Conditions

Quick Updates: The US Senate Does Not Want Your Facebook Password, Interwebz Eraser Button, and Why Anorexia Advocates Make Bad Plaintiffs

A few quick social media legal notes for today.

Three Lego stormtroopers beat a dead Lego horse

"Oh yeah, well I don't want employers to do something they probably aren't doing either--but I'm going to make a law about it!"

First, two senators are continuing to press the employer Facebook issue.  This is the downside of social media–sometimes a story will get a lot of press attention even though it doesn’t need it.  In this case a few stories from several years ago got blown out of proportion, people got outraged, and now we’re wasting time talking about potential legal actions over issues that don’t really matter.  Employers who ask for password already expose themselves to significant legal risk and employees are always free to say no.  I know it’s wishful thinking to ask if we could just move on, but that’d be nice.

The FTC has issued their report on Protecting Consumer Privacy in an Era of Rapid Change.  It’s really long, so we’ll see more about it in the weeks ahead, but the big points were no surprise–they endorse Do Not Track features, want big companies to do more, look to Congress to establish some rules and give the FTC the ability to enforce them, etc.  The biggest surprise to me was the FTC’s frequent endorsement of an “eraser button” that would permanently delete user posts.  It’s similar to what the EU has been debating in the Right to be Forgotten but on a smaller level.  The FTC does admit it might have some technical obstacles, but that’s an interesting first step towards a view that has mostly only gained traction in Europe.

Tumblr announced they will regulate posts about anorexia, cutting, and other self-harm.  The balance between being a neutral content platform (to provide legal protection) and blindly turning away from harmful material is a tricky one.  Amazon faced related pressure a while ago when they allowed books to be published on the Kindle platform that endorsed pedophilia–at first they said they would be a neutral platform then caved under media pressure.  We have yet to see a major platform lose their overall protections as a neutral provider for policing this kind of harmful content, but it’s only a matter of time until it happens.  Then we’ll have to see where we want to draw the line between allowing editorial control against harmful posts and making platforms accountable for anything they host.  Right now it’s easy–advocates for anorexia aren’t great plaintiffs.  But what happens if a large social platform decides to delete all posts that criticize Planned Parenthood because they deem those posts to be harmful to women?

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Filed under Consumer Protection, Employment, Facebook, Privacy, Quick Updates, Social Marketing, Social Tracking

Hey Google, Nobody Ever Thinks They’re Evil

Google needs to get rid of their “Don’t be evil” motto. Not because they are evil but because it’s a horrible motto. First, it provides fodder for everyone the moment they make a mistake. You can find plenty of posts saying they should change their motto to “Don’t be stupid” or “Don’t respect privacy” or plenty of other variations; it’s just too simple.

Guy getting punched in the face.  Hard.

I don't want to do this to you. Seriously. It's my motto.

But second, and I think more compelling, it’s kinda creepy. If I told you my motto was “Don’t walk up to people and punch them in the face” then you’d probably keep your distance from me. It means that’s what I’m thinking about, so the notion that Google is thinking about or reminding themselves not to be evil is a bit concerning.

Google set the stage with their precedent setting 20-year FTC monitoring program. This led to Facebook’s similar program and the FTC essentially looking out at the Internet, thumping their chest, and saying “Who’s next? Who wants a piece of some 20-year monitoring action?” Based on that FTC settlement, one would think that Google would be overly cautious about any kind of program that has privacy implications, whether actual or apparent.

Guess not.

Earlier this week a Stanford researcher discovered code that Google was embedding in some of the ads it served to Safari users that bypassed the way Safari handled user tracking behavior. By default, Safari blocks attempts for ads to place cookies on users’ systems. But Safari does allow information to be placed on a system if the user affirmatively interacts with, say, a web form. So Google placed code that tricked Safari into thinking that the user had submitted some information via a hidden form. This made Safari think it was okay to now allow tracking information on the system so Google got their cookie placed.

From the Google perspective, they were just ensuring that Safari users were treated the same way as other browser users for various interactive elements (like showing what Google+ friends had +1’ed an article, etc.). From the perspective of a user concerned about privacy, this is shady at best.

Google has tried to make their position clear—that this was for good intentions. But they see the other side of the argument and have removed all instances of this code once the Wall Street Journal approached them. That’s a little late, I think.

Perhaps Google has not learned the essential lesson from their FTC settlement: that users do not know Google’s intentions and, worse, they assume their intentions are the opposite of Google’s motto. Google is one of the largest information gathering platforms on the Internet, possibly duking it out with Facebook (or they’ve dwarfed Facebook and we don’t realize it) so they must be extra cautious about any activity that can be viewed negatively. As a lawyer, I know almost any activity can be viewed as risky (“You saved that baby’s life…but what if that baby grows up into the next mass murderer?!”), but there are some activities that are easier to see the downside on than others. This should have been an easy one to identify—any activity that uses a trick to make a browser think the user is doing something they aren’t should have raised a few flags.

Having effective privacy controls and policies is no longer cutting edge, it’s a ticket to entry. Google understands this and that’s one of many reasons they’ve consolidated their plethora of privacy policies (say that ten times quickly) into one document. But they need to go one step further—they need to evaluate every action they take and if it isn’t something they would be proud to put on the front page of Google then they just shouldn’t do it. This isn’t just for Google; many platforms would benefit from this kind of standard. Otherwise small incidents like this one, taking as a whole, will make users and possibly the FTC question if Google is living up to its obligations.

And, seriously Google, let’s change that motto.

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Filed under Google, Privacy, Social Tracking

There’s a Fine Pin Between Brilliant and Creepy

Thanks to Susan Beebe for inspiring this post.

Pinterest is the latest social media flavor of the month/quarter/whatever. It has a slick interface, familiar functions, and celebrates things that users love which keeps people coming back. The user base is exploding and word of mouth is positive.

So is the news that Pinterest is secretly modifying user pins to capture unclaimed affiliate revenue going to bring the party to an end?

Diverted traffic sign.

This is not the final destination you were looking for.

According to this blog post, when Pinterest users post a link to a product on a site that has an affiliate program (such as Amazon) the Pinterest utilizes a third party to modify the link. The newly modified link will now contain a referral code that gives the affiliate credit to some other entity, presumably Pinterest.

Let’s give Pinterest the benefit of the doubt and say that they aren’t removing affiliate links that users might be building in. Because that would be a whole different category of analysis. Instead, let’s assume that Pinterest is only adding these referrals to links that don’t have an affiliate code.

First, let’s be honest–that’s a brilliant revenue generation scheme. It’s frictionless to the ultimate user, painless to the content creators, and provides money to a platform people like using.

Second, let’s be honest again–it’s creepy. Mostly because it isn’t disclosed. It goes beyond the social media norm where we expect platforms to use our browsing and usage data to make money somehow. This isn’t making money off our activity, this is making money off our content. That feels different, even if it may be treated the same.

The site that Pinterest appears to use for this affiliate linking is skimlinks, whose terms recommend their partners to disclose the linking activity based on the FTC endorsement guidelines. The fact that Pinterest may now have an increased financial interest in some pins without disclosing the connection could have legal implications. Perhaps not now if Pinterest treats the pins the same as all others, but it could be an issue to users who provided links specifically without referral codes and the expectation that the links would be plain links to a site.

And such activity might also be in violation of Pinterest’s terms. Pinterest’s terms gives Cold Brew Labs (Pinterest’s creators) the right to “use, copy, adapt, modify, distribute, license, sell, transfer, publicly display, publicly perform, transmit, stream, broadcast, access, view, and otherwise exploit such Member Content…” That’s a broad list that probably includes modifying a non-affiliated link into an affiliated link.

However, in the Privacy policy section on Links to Other Sites, Pinterest states “The fact that we link to a website or present a banner ad or other type of advertisement is not an endorsement, authorization or representation of our affiliation with that third party…” Read one way, that could be true–if there’s a link to the Kindle version of Ready Player One with a user’s affiliate code then Pinterest has made no representation. But the same link and image could also be through the skimlink/Pinterest affiliate, and in that case there is an affiliation.

Technical analysis aside (although that’s a big one), the bigger factor is just that Pinterest missed an opportunity to tell its users what it was doing. Most people would be fine with it, would embrace the innovative way of funding a site they like. But doing so without telling users could lead to more questions.

If Pinterest is modifying our content now without telling us, what else will they do? Will users with numerous vanilla links that Pinterest can capture be preferred as one of the random boards new members automatically follow? Will the pins be preferred in searches? Can I opt out?

In some ways it feels like LinkedIn’s failed attempt to capture user’s profile information and make it automatically opt into social marketing. After that backlash, LinkedIn rolled back those plans. Will Pinterest come clean about their activities and will the users care?

Pinterest has a great opportunity to build on the relationship with their users by talking about their practice, clarifying their terms and privacy policy to account for these practices, and giving users the ability to opt out. The vast majority will be happy to have it continue and they will be reassured that their content is not being secretly modified for financial gain.

And by disclosing the practice they can capitalize on the brilliance while minimizing the creepy.

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Filed under Affiliates, Commercial Activity, FTC Endorsement Guidelines, Pinterest