A marketing law trend that is recently emerging in my practice has been increased demand to work on destination marketing promotional contests (i.e., contests promoting trips, vacations and adventures to particular destinations – both in Canada and internationally).
This may seem counterintuitive given the current circumstances, but I have been contacted by several brands and local and international governments to advise on destination contests, presumably in anticipation of an easing of local and international COVID-19 travel.
Some destination related brands (e.g., governments, hotels, travel agencies, airlines and tour operators), it seems, want to get ahead of the curve to keep their products top of mind and aim to drive visitor traffic as travel restrictions cautiously ease around the world.
Given the increased (and slightly unexpected) interest in destination contests/sweepstakes, I thought I would post a short note with some key considerations for sponsors and some common questions I get about trip-related contests and other promotions (both recently and in connection with other local and international trip contests I’ve worked on over the years).
PRIZES
The main difference between destination and trip contests, compared with other types of contests, is the type of prize. In destination (i.e., trip) contests, sponsors are awarding a trip or vacation, typically as a grand prize, which is sometimes combined with other types of secondary prizes.
Given that contest rules are contracts, sponsors can broadly determine how many and what kind of prizes are awarded. Having said that, in Canada, certain statutory disclosure requirements must be met, including clear disclosure of the number and approximate retail value of each prize.
In addition, it is important that all contest creative materials be accurate and not state or suggest, for example, that certain prizes are available when they are not or fails to disclose any important conditions or limitations associated with a contest prize, as would also ordinarily be the case with marketing for other types of contests (i.e., contest marketing must not be false or misleading under Canada’s federal Competition Act or provincial consumer protection laws).
TRIP PRIZE DESCRIPTION
In destination and trip contests, one of the key differences from other types of contests is the description of the prize (or prizes).
Given the commonly increased value and complexity of trip contest prizes, it is important to take additional care in describing the prize both in terms of describing the prize and also to set out any material conditions or restrictions, which tend to be more complex than more straightforward or lower prize value contests.
This commonly includes describing the prize, its approximate retail value, whether it is being awarded as a trip arranged by the sponsor and/or agency in their sole discretion (or awarded by way of cash or a gift certificate), any key restrictions such as blackout periods or who chooses the details of the trip, whether the prize includes a companion, limitations on additional expenses and terms setting out an alternative prize in the event the trip prize cannot be awarded and a deadline as to when the prize can be redeemed.
It can also be important to either describe or link any material terms and conditions relating to travel vouchers, airline or other tickets or other material aspects of the prize (or prizes).
WINNER SELECTION
In general, destination or trip contests are no different than other types of promotional contests with respect to how winners are chosen.
Whether not a contest/sweepstakes involves a trip prize, in Canada, sponsors still have significant latitude to determine how to enter and win, including by way of entry ballots and a random draw for the prize, skill or consumer generated entry contests (e.g., judged photo, video or essay competitions) or combinations of different types of entry and winner selection (e.g., skill-based entries that are judged with finalists entered into a draw).
In all cases, however, it remains important to ensure that what entrants must do to enter and participate in a contest complies with the lottery provisions of Canada’s Criminal Code (under section 206 of the Code).
SPONSOR LIABILITY & RISK
Contest sponsors commonly require entrants to agree to and complete winner release forms as a condition of a contest (regardless of whether or not it is a trip or destination contest).
For destination contests, however, which typically involve more risk and higher value prizes, it is particularly important that release language in contest rules and winner releases themselves be fulsome to cover off key potential risks for the sponsor, related entities and others involved in the organization and promotion of the contest.
For cross-border contests, it is also prudent to ensure that winner release forms are enforceable in the relevant jurisdictions in which they are open.
In addition, if a trip prize will include a companion (i.e., in trips for two to a destination), the contest/sweepstakes rules should stipulate that the companion must also complete the sponsor’s release form as a condition of awarding the trip prize.
MINOR COMPANIONS
In destination contests where the prize includes a trip for a minor companion, the rules should, as with any other companion, require that the winner submits a completed release form for their companion.
However, given that minors cannot contract in many jurisdictions, contest sponsors commonly require that a parent or guardian complete a release form on behalf of any minor companions.
Also, destination contests aside, one of the reasons that many promotions are restricted to entrants who are age of majority where they reside is that because contest rules are contracts and minors cannot contract in many jurisdictions, contest rules may not in fact be enforceable if a minor wins the contest and issues arise and the sponsor wants to enforce the contest rules.
CANADIAN ANTI-SPAM LAW (CASL)
Canada’s federal anti-spam legislation (CASL) is also often relevant when running contests in Canada, including if existing 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 or if entrants’ e-mail addresses or other electronic addresses will be shared with third parties (e.g., related entities or affiliate marketers).
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 any electronic marketing related to a promotional contest that is open to Canadians.
CASL Resources
For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors.
CASL Checklists and Precedents
For CASL checklists and precedents that we offer for sale, see: CASL Checklists and Precedents.
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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
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