Pepsi Takes Heat for Bending Contest Rules

Consumer products giant PepsiCo, which recently launched an online contest that will award more than $20 million to hundreds of nonprofits over the next year or so, has been criticized for bending the contest's rules to help out a contestant, the New York Times reports.

The Pepsi Refresh contest has been praised as perhaps the most ambitious online effort to raise money and recognition for nonprofits and social causes to date. Through the contest, thousands of organizations compete for cash prizes of $5,000, $25,000, $50,000, and $250,000 every month, using materials and information submitted to the Refresh Web site before each monthly competition gets under way. According to contest rules, those materials cannot be edited once they've been submitted.

The recent controversy arose when a YouTube video submitted by the Joyful Heart Foundation, a charity launched by actress Mariska Hargitay to support victims of sexual assault, was added. It included a photo of the Pepsi Refresh Web site, which was not available until after the submission deadline, causing some contestants to ask whether Pepsi was giving preferential treatment to the celebrity-backed effort.

Pepsi, which consulted with experts in social media prior to the launch of the Refresh Project in order to avoid the problems other companies have run into with their own online giving contests, claims the oversight was an honest mistake and did not result in any advantage to Joyful Heart, which was in first place in this month's contest as of Thursday. The company also said it would give away a third $250,000 prize, instead of two it originally planned to award.

"We didn't follow our guidelines to the letter," said Jill Beraud, chief marketing officer for the American beverages unit at Pepsi. "The bottom line is that we've learned from this and we're moving on."

Stephanie Strom. "Pepsi Charity Contest Trips Over Its Own Submission Rules." New York Times 02/25/2010.