Consumer-Generated Content Got You BURNED?

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ADOTAS EXCLUSIVE — More and more companies are incorporating consumer-generated content into their promotions, and it can easily be a publicity boon — or a public-relations bust. As with any double-edged sword, treading carefully is the key to success.

In recent years, Doritos ran two successful contests in which consumers were invited to submit content for the chance to be featured in a Super Bowl commercial. The popularity of these kinds of promotions has emboldened other companies to experiment with consumer-generated content. But for every success story, there are multiple promotions that have been plagued by snafus and missteps. Some have ended up being a public embarrassment – and some have even resulted in lawsuits. And many missteps have gone unreported and overlooked due to skillful damage control on the part of sponsors.

Promotions with consumer-generated content can offer a host of benefits to sponsors. If all goes well, it could generate great publicity (read: revenue) — for a relatively small investment. It can turn into a viral advertising campaign and Web site traffic spikes. Customers spend more time interacting with the content and learning about a company’s products than they ever would otherwise.

But significant challenges and unexpected roadblocks inevitably crop up in any interactive advertising promotion. In addition to the legal requirements that apply to promotions, there’s an inherent risk in putting so much power in the hands of consumers. The more control they have, the less control you have. Fortunately, there are ways to sidestep or at least reduce the risks in this internet marketing gambit.

Promotions Laws

Most recent promotions involving consumer-generated content have been run as contests in which prizes are awarded to winners. All 50 states prohibit companies from running chance-based promotions in which consumers are required to spend a cent to participate. Though it may be lawful in most states to require a purchase or payment for a skill-contest, there are a number of states with broadly worded statutes that could restrict such a requirement. Therefore, sponsors should pause and evaluate these restrictions before offering any promotion in which consumers are required to pay money or purchase a product.

In a contest, it is important to ensure winners are selected on the basis of skill – not chance. It may be easy to accomplish this if the sponsor selects the winners, but it’s harder to make sure that skill wins out if the public votes. Many people will vote for friends, injecting an element of chance into the promotion. Many sponsors have caught entrants actively trying to manipulate the voting results by getting friends to rate their entries highly while giving low ratings to competitors. (Which of course leads to a litany of consumer complaints and forces red-faced sponsors to engage in a round of damage control).

If public voting is central to the contest, there are various strategies a sponsor can employ to reduce the chaos and malfeasance. Combining public voting with an internal judging process certainly helps. In some cases, it may be beneficial to have judges narrow entries down to a handful of finalists before inviting the public to vote. It’s also usually a good idea to limit the number of times people can vote in order to truncate the opportunities for fraud.

Liability for Content Posted by Consumers

Although a company can pretty much guarantee that its content complies with applicable laws, it’s harder to confirm that consumer-generated content is compliant. The more control a company gives to consumers, the more creativity the company is likely to see. But. This introduces a huge element of chance – and submissions are more likely to contain content, from music, images, to shots of other people, that could violate a third party’s rights. If a third party finds that its intellectual property or publicity rights have been violated by a video posted on the sponsor’s Web site, that may file a lawsuit.

he first line of defense is a good set of disclosures in the contest rules and advertisements. Sponsors should clearly disclose that entrants may not submit content that contains any elements that violate a third party’s copyrights or trademark rights — and that content should not depict any individuals who have not granted permission to be in the videos. In some cases, it may be beneficial to screen submissions, but whether that’s possible may depend on the amount of resources at the sponsor’s disposal, the technology used and the number of videos submitted.

Sponsors can also take some comfort in laws that provide immunity for content posted by others. For example, the Digital Millennium Copyright Act (DMCA) generally provides a safe harbor to service providers that promptly take down content after receiving a notice alleging that content infringes a third party’s copyrights. Section 230 of the Communications Decency Act (CDA) also essentially grants Internet service providers immunity from liability for publishing false or defamatory material as long as that material was provided by another party.

The limits of protection offered by these laws are currently being tested in lawsuits involving consumer-generated content. In one such suit, Viacom is arguing that YouTube should not be able to take advantage of the DMCA’s safe harbor because YouTube receives a financial benefit attributable to the infringement and has the right to control it. In another lawsuit, Subway is attempting to hold Quiznos liable for statements made by consumers, notwithstanding the protections offered by the CDA, because Quiznos allegedly encouraged those statements. Companies that work with consumer-generated content need to pay close attention as these cases develop.

Planning a Successful Promotion

Many promotions don’t run smoothly simply because sponsors fail to identify risks and plan accordingly. Sponsors can reduce their exposure to complaints and lawsuits by following these basic steps:
• ensure that a promotion complies with contest laws in each state
• discourage consumers from posting infringing content
• act expeditiously to remove content upon proper notification of infringement
• if a sponsor plans to use content submitted by consumers, it should take steps to secure rights to that content.

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