CANADIAN CONTEST RULES/PRECEDENTS
Do you need contest rules/precedents
for a Canadian contest?
We offer many types of Canadian contest/sweepstakes law precedents and forms (i.e., Canadian contest/sweepstakes law precedents to run common types of contests in Canada). These include precedents for random draw contests (i.e., where winners are chosen by random draw), skill contests (e.g., essay, photo or other types of contests where entrants submit content that is judged to enter the contest or for additional entries), trip contests and more. Also available are individual Canadian contest/sweepstakes precedents, including short rules (“mini-rules”), long rules, winner releases and a Canadian contest law checklist. For more information or to order, see: Canadian Contest Law Forms/Precedents. If you would like to discuss legal advice in relation to your contest or other promotion, contact us: Contact.
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As a competition and advertising lawyer, I work on many promotional contests for a wide range of clients – from large consumer products firms, to agencies, to start-ups and individuals that want to promote their brands in a perennially successful way: contests. It’s a bit of a quirky area of law, but one thing is certain – both brands and consumers love them.
While contests can vary considerably depending on the type of promotion, where the contest will be run and how it will be promoted, in Canada there are a few important considerations that advertisers and the agencies and counsel helping them need to think about.
In general, these typically involve questions relating to the type of promotion (e.g., how to enter and qualify, prizing, who can enter, etc.), where it will be run (e.g., Canada-wide, Canada excluding Quebec, North America, etc.) and how it will be promoted (e.g., traditional media, social media, e-mail marketing or at trade shows or other events).
Regardless of the type of promotion, it is important to comply with key laws, which typically include the Competition Act (which contains mandatory statutory disclosure for contests) and Criminal Code (avoiding the illegal lottery provisions of the Code).
Other laws that can apply include intellectual property (e.g., where a sponsor wants to use 3rd party marks or other 3rd party IP), privacy (where entrants’ personal information will be collected and used), CASL (where a sponsor will be marketing to entrants by e-mail) and social media platform rules (where social will be used to promote the contest or for entry).
In this regard, in my years working on contests, the following have emerged as some of the key issues that need to be considered before launching a contest:
Have the basic Competition Act requirements been met?
In general, the Competition Act requires that certain up-front disclosure be made in point-of-purchase marketing materials before a consumer has been inconvenienced or purchased a product. These basic disclosure obligations are mandatory and carry potential civil penalties if not met.
Where will the contest be run?
In general, most of Canada has one set of requirements and Quebec has additional rules. As such, if planning to run a contest in Quebec, advice should be obtained about the additional requirements (e.g., filings, applicable duty and translation).
Will the contest be run in the United States?
If so, U.S. sweepstakes law tends to be state based. As such, experienced U.S. contest/sweepstakes counsel is needed to efficiently advise on uniform requirements to be added to Canadian rules.
Promoters who are planning to run cross-border contests in Canada and the U.S. will commonly prepare an initial set of draft rules and forms and then have local counsel review the draft for the Canadian or U.S. requirements.
Will the contest involve social media marketing?
If so, most social media platforms (e.g., Facebook, Instagram, Twitter, etc.) require additional requirements for contest rules and forms and some also have additional requirements for the operation of the contest (e.g., to comply with local contest laws, no spamming, disclaimers for contest rules, etc.).
With the increased scrutiny of regulators on misleading endorsements and testimonials, contests that will require entrants to share, like, etc. a sponsor’s content as a condition of participating in a contest also commonly require rules requiring material connection disclosures (e.g., to require entrants to use the term #contest, etc.).
Will the contest involve electronic marketing
by the sponsor or entrants?
If so, Canadian anti-spam law (CASL) may apply. Canada’s federal anti-spam legislation (CASL) is often relevant when running contests in Canada, including if electronic distribution lists will be used to market the contest, the contest will include the collection of e-mails for marketing unrelated to administration of the contest, if entrants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers) or entrants can “share” the contest with friends or family for additional entries.
Given the potentially severe penalties for violating CASL, which include administrative penalties of up to CDN $10 million, it is important for contest sponsors to ensure that they comply with CASL for electronic marketing related to promotional contests open to Canadians.
For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors. For CASL checklists and precedents that we offer for sale, see: CASL Checklists and Precedents.
Will the contest involve a purchase requirement or other potential “consideration” (i.e., entrants providing something of value)?
If so, promoters in Canada need to understand how to reduce risk under the federal Criminal Code, which prohibits illegal lotteries. Common strategies to reduceCriminal Code risk involve a bona fide no purchase required option and skill-testing question (though there can be other important Criminal Code related points and nuances depending on the type of promotion and what is required for entrants to enter and participate).
Can a purchase be required to enter and participate?
In some cases, arguably yes. In general, theCriminal Code prohibits: (i) games of chance (or mixed chance and skill), (ii) where participants pay money (or something of value), (iii) for a chance to win a prize.
There are strategies to avoid the Criminal Code in certain cases. Promoters need to be cautious, however, where a contest requires a purchase or something else of value as a condition of entry.
Will the contest sponsor be partnering
with a third party for the promotion?
If so, there may be advisable steps to minimize the risk of liability arising from the co-sponsor’s or partner’s conduct (e.g., entering into an agreement with the third party setting out the parties’ respective obligations, indemnities in the event something goes wrong and covenants to avoid certain types of marketing or other activities not contemplated by the contest rules – e.g., e-mail marketing where compliance steps have not been put into place to comply with CASL).
In short, sponsors partnering with third parties need to pause and consider the potential risks of co-sponsoring a promotion and measures to mitigate that risk and protect them from liability.
Are you planning to use third party
intellectual property (e.g., trade-marks)?
If so, promoters need to consider whether they have appropriate consents in place and have complied, for example, with any required disclaimers or other requirements to reproduce third party names, marks or imagery.
For more information about Canadian contest law, see: Contests, Contests and CASL, Contest/Sweepstakes FAQs and Contests and Social Media.
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KEY LEGAL TIPS FOR RUNNING
A PROMOTIONAL CONTEST IN CANADA
The following are some key legal tips for operating a successful and legal contest in Canada:
CRIMINAL CODE
Avoid the illegal lottery offences of the Criminal Code (e.g., include a bona fide “no purchase necessary” entry option and skill element, such as a time-limited, multiple-step mathematical question for potential winners as a condition of awarding prizes).
SHORT RULES (MINI RULES)
Include short rules / mini rules with all of the required Competition Act disclosure requirements for point-of-purchase materials (e.g., print and in-store marketing, social media and Internet sites, packaging and labeling, television and radio spots, etc.).
For more information, see: Canadian Contest Law Forms/Precedents.
LONG RULES (OFFICIAL RULES)
Ensure that precise long rules (i.e., the official contest rules) are included that reflect the details of the contest, anticipate potential contingencies (e.g., technical problems) and set out the terms of the contest as clearly as possible – for example, eligibility requirements, how to enter, prize descriptions, number and value of prizes, draws and award of prizes, odds of winning and indemnifying and releasing the contest sponsor and any co-sponsors or prize sponsors.
Contests are contracts, and so they should be as accurate, clear and precise as possible in the event issues arise.
For more information, see: Canadian Contest Law Forms/Precedents.
WINNER RELEASE FORMS
Consider using winner release forms for contest winners.
While not required by law in Canada, winner release forms are almost always used by contest sponsors to have winners confirm that they have complied with all contest rules and release the sponsor from legal liability. Signing and returning winner releases is also commonly included in contest rules as a condition of awarding a prize.
Winner release forms are particularly important for contests in which there may be higher risk (e.g., where the contest involves high value prizes or a trip prize).
For trip contests, sponsors are generally advised to use winner releases for both winners and any travel companions (and guardian releases for any minor companions).
For more information, see: Canadian Contest Law Forms/Precedents.
FALSE OR MISLEADING ADVERTISING
Ensure that advertising and marketing materials are not false or misleading (i.e., comply with the general civil and criminal misleading advertising sections of the Competition Act, under sections 74.01 and 52).
In this regard, contests in Canada must comply not only with stand-alone contest provisions of the Competition Act (under section 74.06) but also with the general misleading advertising sections of the Competition Act.
It is particularly important to ensure that the marketing materials also match the contest rules and that all material aspects of the contest (e.g., number and type of prizes, prize values, how to enter and win and any conditions/limitations) are accurately described in the short rules, long rules and marketing materials.
CANADIAN FEDERAL ANTI-SPAM LAW (CASL)
Comply with Canada’s federal anti-spam legislation (CASL).
CASL is often relevant when running contests in Canada, including if electronic distribution lists will be used to market the contest, the contest will include the collection of e-mails for marketing unrelated to administration of the contest, if entrants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers) or entrants are either required or incentivized (e.g., through additional entries) to “share” the contest with friends or family.
Given the potentially severe penalties for violating CASL, which include AMPs of up to CDN $10 million, it is very important for contest sponsors to ensure that they comply with CASL for any electronic marketing related to promotional contests open to Canadians.
For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors.
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CASL Compliance Checklists and Precedents: For information about the CASL compliance checklists and precedents we offer, see: CASL Compliance Checklists and Precedents.
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INTELLECTUAL PROPERTY CONSENTS
Consider whether consents are needed (and if necessary obtained) to reproduce third-party intellectual property – for example, trade-marks, logos, etc. – or to transfer ownership in contest materials – for example, where contestants create original material as part of the contest.
Contest rules in Canada commonly include rights (e.g., a licence) for the sponsor to use information and content contributed by entrants and if entrants will be contributing original content (e.g., photographs, essays, etc.) it is also a good practice for sponsors to include guidelines relating to their rights to use (or reject) any entrant contributed content.
For more information, see: Guidelines for Consumer Generated Content Contests.
U.S. LEGAL ADVICE IF OPEN IN THE U.S.
Obtain U.S. legal advice if the contest will be open to U.S. residents or limit the contest to only Canadian residents.
SOCIAL MEDIA PLATFORM RULES
Comply with social media sites’ terms of use if using social media to promote or host a contest (e.g., Facebook’s Promotions Rules).
Also ensure that appropriate disclosures are made in all social media marketing (i.e., include short rules).
For more information, see: Contests and Social Media.
OTHER COMPETITION LAW
AND ADVERTISING LAW RULES
Consider whether other competition or advertising law rules may apply to a contest. For example, in addition to the stand-alone contest provision (section 74.06), the Competition Act also contains provisions governing deceptive prize notices, general misleading advertising (sections 52 and 74.01) and telemarketing that involves prizes.
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SERVICES AND CONTACT
I am a Toronto competition/antitrust lawyer and advertising/marketing lawyer who helps clients in Toronto, Canada and the US practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
My Canadian advertising/marketing law services include advice in relation to: anti-spam legislation (CASL); Competition Bureau complaints; the general misleading advertising provisions of the federal Competition Act; Internet, new media and social media advertising and marketing; promotional contests (sweepstakes); and sales and promotions. I also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
For more information about my services, see: services
To contact me about a potential legal matter, see: contact
For more regulatory law updates follow me on Twitter: @CanadaAttorney
