Hollywood movie star Reese Witherspoon and her clothing line, Draper James, LLC, have found themselves the subjects of a public relations debacle, and now, a class action after running a promotion for teachers gone horribly wrong.
In April, Draper James ran an Instagram promotion to recognize and thank teachers for their work during the COVID-19 pandemic. The April 2, 2020 promotion post stated: “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.”
The Instagram post went on to provide further details of the promotion, including that to “apply”, teachers needed to fill out a form with their name and work email addresses, a photo of their school IDs, the grade level and subjects they teach, as well as their school name and state. In exchange for providing what the teachers alleged to be “sensitive personal, employment information,” teachers thought they would receive a free dress from the brand. While the Instagram post did caveat in a parenthetical that the offer was “valid while supplies last – winners will be notified on Tuesday April 7th” the post did not disclose that only 250 teachers would receive a free dress. The lawsuit claims that the “vague illusory comment” was insufficient to place a reasonable consumer on notice that that this was a sweepstakes or that the brand would “only be making an unreasonably limited number of products available under this offer.”
According to the complaint, Draper James received almost one million entries, each of which included the personal information of a teacher. After the entries were received, Draper James announced that the offer was a sweepstakes and provided all entrants with a coupon for 20 percent to 30 percent off a future purchase. The announcement sparked a social media maelstrom – with teachers posting angry comments on social media about the misleading promotion in what they viewed, according to the complaint, as a deliberate stunt that “exponentially increased the size and value of their customer marketing database in ways that saved [Draper James] hundreds of thousands, if not millions, of dollars in marketing costs…” by not having to pay for the teachers’ personal information.
While Draper James claimed that it did not anticipate the volume of the entries received, the complaint claims that Draper James “promoted and encouraged the wide circulation of [the] offer to teachers nationwide” by encouraging fans to share the post and tag their favorite educator in the comments and publicizing it on television programs including “Good Morning America” and “The Today Show” in which Witherspoon “specifically endorsed and promoted this offer” herself, according to the complaint.
The teachers’ outrage led to the instant class action, which was originally filed in Los Angeles County Superior Court and was recently removed to the U.S. District Court for the Central District of California. The suit asserts causes of action for breach of contract and violation of the California Consumer Legal Remedies Act (CLRA) and Unfair Competition Law (UCL), including a claim that Witherspoon and Draper James violated the California Consumer Privacy Act (“CCPA”). The Complaint alleges that Draper James made an offer, promising new dresses in exchange for entrants providing their personal contact and employment information, and then breached that promise, failed to protect that personal information, and has not provided a means for individuals to exercise their access and deletion rights under the CCPA.
The addition of the CCPA claim is interesting to note, as the CCPA does limit the private right of action to the “unauthorized access and exfiltration, theft, or disclosure” of nonencrypted and nonredacted personal information as a result of a failure to implement and maintain reasonable security procedures. The claims in the complaint are quite limited, and appear to be outside the scope of that limited right, but the inclusion of a claim under CCPA demonstrates that aggressive plaintiff attorneys will continue to include CCPA claims in complaints that involve claims under the CLRA and UCL, until further guidance is provided by the courts in California.
The plaintiffs and class members seek restitution and disgorgement, as well as injunctive relief.
Promotion sponsors must ensure that their advertising and their promotion rules match, with regard to the quantity and description of the prize.
The Draper James promotion debacle could have easily been avoided had the brand drafted and included abbreviated rules with a link to a comprehensive set of official rules on the Instagram post, which clearly articulated that the message was in fact a sweepstakes and included such material terms as winner selection and prize details (including the number of prizes to be awarded in the sweepstakes). Official rules help serve as a contract between the promoter and the sweepstakes participants, and may have helped shield Draper James from potential liability.
Further, the call to action language in the Draper James Instagram post should have been drafted precisely to provide consumers with all of the necessary information to enter and understand the structure of the promotion. For example, the post should have included the phrase “enter for a chance to win” rather than “to apply.” In addition to using the hashtag #DJLovesTeachers, the brand also should have included a hashtag such as #sweepstakesentry to comply with FTC disclosure requirements. Promoters should also not advertise prizes that they do not reasonably believe they will have enough of to meet the expected demand. Too often, advertisers believe a “while supplies last” message eviscerated their liability for offers with limited quantities of items. Instead, the language was intended to be used for retailers that do not wish to offer rain checks on sales – more on that in another article.
Lastly, this case highlights that promotions also lead to risk under privacy laws if not properly conducted. A business must be thoughtful and strategic regarding its data collection practices, and should consider what data is needed to fulfill the terms of the promotion, what data may be useful beyond the promotion, to whom the data will be shared, and the permissions needed from the consumer to accomplish these goals. Privacy policies should be clear and conspicuous, and in California, must be available at or before the point where personal data is collected. In addition to the fact that requiring entrants to provide such extensive personal information for marketing purposes in order to enter the sweepstakes may constitute consideration (i.e., the entrant providing something of value in exchange for a chance to win) and render the sweepstakes an illegal lottery, data that is collected must be appropriately stored and processed, which may require increased data security costs and compliance obligations. Moreover, while not every business is subject to the CCPA, it does cover businesses that collect the personal information of more than 50,000 California consumers, households, or devices, which may not be intended but could occur if a sweepstakes goes viral.
As made apparent from the negative attention and now, putative class action, the success of sweepstakes such as this one cannot be measured only by good intentions or the growth of a marketing database. Considerations must be given to appropriate disclosures, privacy, data security and other potential compliance obligations. With proper planning, your sweepstakes can be a success.