Advertising Law Alerts

November 10th, 2011

In Case of First Impression, NAD addresses “Like-gating” on Facebook

In response to a challenge brought by 1800-Contacts, Inc., the National Advertising Division of the Council of Better Business Bureaus ("NAD") has reviewed advertising claims made by Coastal Contacts, Inc. ("Coastal"), through a Facebook promotion offering "free" products to consumers who "Liked" its Facebook page. It was the first time NAD has addressed "Like-gating."

Coastal’s offer of "free" merchandise came in the form of a Facebook-based “like-gated” promotion. Like-gated promotions require consumers to "Like" a company's Facebook fan page in order to gain access to a sweepstakes, coupon code, or savings noted in an advertisement. The "Free Glasses" promotion at issue here stated: "Like This Page! … So you too can get your free pair of glasses!"  Although additional terms and conditions applied to this offer, this information was not available to consumers until after they entered the promotion by "Liking" Coastal’s Facebook page. NAD noted that "free" claims must clearly and conspicuously disclose, at the outset of the offer, the material terms and conditions of the offer in close conjunction with the free merchandise claim. NAD recommended that Coastal, in future advertising, provide a clear and conspicuous explanation of the additional terms and conditions at the "outset" of any promotional offer of free merchandise rather than only after the consumer takes an action by liking a page.

NAD further determined that the display of the total number of "Likes" on Coastal’s Facebook page could mean many things to consumers, including that consumers like the company, product or service; that the individual who Liked the content did so to enter a Like-gated promotion contest or sweepstakes; or that the consumer wanted to share some content on the company’s page with her Facebook Friends.  All such actions, according to NAD, constitute "general social endorsement[s]." Here, because actual consumers Liked the Coastal page, and those consumers who participated in the Like-gated promotion received the benefit of the promotion, NAD determined that Coastal could substantiate the general social endorsement that the Likes convey.  NAD noted, however, that the outcome of the case would have been different if the evidence demonstrated that consumers who participated in the like-gated promotion could not or did not receive the benefit of the offer, or that the advertiser used misleading or artificial means to inflate the number of Facebook "likes."

Finally, during the review process NAD questioned why the number of Facebook "fans" or Likes touted by Coastal in press releases to the investor community, exceeded the number on its U.S. Facebook page. Coastal explained that the numbers are based on the total number of Likes Coastal had received from all of the company’s Facebook pages globally.  In order to avoid conveying the unsupported claim that the Coastal's U.S. Facebook page alone had obtained such a high number of "fans" and Likes, NAD recommended that Coastal clarify that the numbers were based on the total number the Company had received from all of its Facebook pages targeted to different countries all over the world.

This decision serves as an important reminder to brands that the same disclosure rules apply in social media as in traditional advertising.  It also provides guidance on the use of Like-gating and how to appropriately tout a brand’s "Likes."  If you have any questions about NAD's decision or other advertising matters, please contact Terri Seligman at (212) 826 5580 or tseligman@fkks.com, or any other member of the Frankfurt Kurnit Advertising Group.