NYLJ Publishes Article on Avoiding Viral Promotion Malfunctions by Andrew Lustigman and Morgan Spina

New York Law Journal published an Expert Opinion article authored by attorneys Andrew Lustigman and Morgan Spina, entitled “Avoiding Viral Fashion Promotion Malfunctions.” The article explores the difficulties associated with sweepstakes, contests, and promotions in social media marketing and how even well-intentioned “giveaways” can go wrong. During the COVID-19 pandemic, many companies have used social media to promote their brand while also contributing to relief efforts. In April, Reese Witherspoon’s fashion label Draper James launched a promotion that would gift teachers with a dress from the brand’s collection, stating on Instagram, “Dear Teachers: We want to say thank you. During quarantine, we see you working harder than ever to educate our children. To show our gratitude, Draper James would like to give teachers a free dress. To apply, complete the form at the link in bio before this Sunday, April 5th, 11:59 PM ET. (Offer valid while supplies last—winners will be notified on Tuesday, April 7th.).” The promotion spurred a myriad of teachers to claim their free dress, but Draper James only had 250 dresses available to fulfill the offer. Given the number of entrants, the company clarified that the promotion was a sweepstakes, not a mass giveaway, revealing its actual available dress inventory and promising a 30% discount coupon to remaining entrants. “Potentially eligible teachers, however,” explain Mr. Lustigman and Ms. Spina, “had already submitted personal information under the guise that they would be receiving a free dress, so this clarification was too late. Calls to ‘Boycott Draper James and Reese Witherspoon’ (and worse) soon spread throughout the social media platforms, turning an attempt to generate goodwill into a public relations nightmare.” A class action lawsuit followed filed against both Draper James and Reese Witherspoon in her individual capacity alleging that the faulty promotion amounted to a false and deceptive sweepstakes or lottery, with the first amended complaint filed on July 17 in the Central District of California. The plaintiffs allege that 904,342 individual entries were received by Draper James and assert that the April 2 Instagram post was an “offer of specific consideration that was open for a limited period of time” requiring entrants to provide their contact information and “sensitive education employee identification information, including pictures of their school IDs, the grade level and subjects they teach as well as their school name and state,” which constitutes consideration. The company’s failure to fulfill its offer thus converted the contractual offer into an illegal sweepstakes or lottery, with causes of action including breach of contract, violation of the California Consumers Legal Remedies Act, violation of the California Business and Professions Code, and violation of New York General Business Law. Also at stake are certain privacy-related concerns, including how the data submitted by participants is currently being treated and how it will be treated in the future. The authors remind that “companies should ensure that they have a robust and accurate privacy policy in place, particularly prior to engaging in a sweepstakes or contest where they will be collecting personal information from participants. It is important for companies to be clear on how they are going to use and store this information.” Additionally, they note that “a properly structured set of rules could have avoided a number of the issues that were raised in the class action lawsuit. The rules would have included the number of dresses available, covered the privacy-related issues, and otherwise would have included a dispute resolution provision.” The authors conclude, “Before launching any promotional marketing campaign, it is critical to set forth how the promotion will run and how data will be handled. Equally important is anticipating what could potentially go wrong, and constructing appropriate alternatives and dispute resolution processes to account for these potential snafus.”

Please also see Olshan’s April 30, 2020, Advertising Law Blog post “Reese Witherspoon’s Clothing Company Receives Backlash for Changing Rules in Teacher Appreciation Dress Giveaway for Covid-19”