Destination contests/sweepstakes (i.e., trip contests) are popular seasonal marketing tools used by many clients and businesses to increase sales during the holidays and winter season. They often include ski, spa, beach and other snow-bird travel packages to popular Canadian and international destinations.
While trip contests may seem counterintuitive given the current circumstances, trip contests often allow sponsors to select flexible periods in which entrants can redeem prizes and allow sponsors to unilaterally substitute prizes. Considering this, it is not surprising that we have advised many local and international governments, travel and tourism entities and marketing agencies on the key aspects of running trip contests in Canada.
The following is a short overview with some key Canadian legal considerations for contest sponsors, co-sponsors and agencies regarding trip-related contests and other similar promotions.
When launching a contest in Canada, it is important that sponsors (as well as any co-sponsors or marketing partners) comply with key Canadian contest rules, including the federal Criminal Code, Competition Act and CASL (Canadian anti-spam law).
TRIP PRIZES
The main difference between trip contests, compared with other types of contests, is the type of prize. In trip contests, sponsors award a trip or vacation, typically as a grand prize, which may be (and often is) 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. Nevertheless, 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. For example, contest sponsors must avoid false or misleading representations under the federal Competition Act (e.g., that suggest certain prizes are available when they are not or that fail to disclose important conditions or limitations associated with redeeming a contest prize).
TRIP PRIZE DESCRIPTION
Another key difference between trip contests and other types of contests is the description of prizes.
Considering the commonly increased value and complexity of trip contest prizes, additional care should be used when describing the prizes and any material conditions or restrictions associated with, for example, redeeming the prize.
This commonly includes describing the trip prize in reasonably significant detail, 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 in some other way, such as cash or a gift certificate), any key restrictions (e.g., blackout periods) and who chooses the details of the trip, whether the prize includes a companion, limitations on additional expenses, describing an alternative prize in the event the trip prize cannot be awarded and a deadline to redeem the prize.
WINNER SELECTION
In general, trip contests are similar to other types of promotional contests in selecting winners.
Whether not a contest involves a trip prize, in Canada, sponsors still have significant latitude to determine how to enter and win, including through entry ballots, random draw selection, skill, consumer generated entry (e.g., through competing photo, video or essay submissions) or a combination of different types of entry and winner selection (e.g., skill-based entries that are judged, shortlisted and finally selected through a draw).
Regardless, it is important for sponsors to comply with (i.e., avoid) the illegal lottery provisions of Canada’s Criminal Code (under section 206) (e.g., have a bona fide no purchase entry alternative if winners will be chosen by random draw and any prizes are included that are “goods, wares or merchandise”).
SPONSOR LIABILITY AND RISK
While not required by law, contest sponsors often require entrants to agree to complete and sign winner release forms as a condition of winning a prize.
For trip 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 address potential risks for the sponsor, co-sponsors, partners 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 jurisdiction(s) in which they are open (e.g., local counsel and Quebec counsel commonly comment on not only contest rules but winner release language as well).
In addition, if a trip prize will include companions (i.e., in trips for two or more people), contest rules should require winners to return completed and signed companion winner release forms.
MINOR COMPANIONS
In trip contests where the prize also includes a trip for a companion, the rules should also require the winner to return not only a completed and signed and completed companion release form, but also a guardian release if the companion is a minor.
This is because in many jurisdictions, minors cannot contract. As such, contest sponsors commonly require that a parent or guardian complete and sign a guardian release on behalf of any minor companions who will accompany the winner on the trip.
Also, trip 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 may not be able to contract (i.e., there is a risk that if minors win prizes, and any issues arise, the contest rules may not in fact be enforceable against the minor).
CO-SPONSOR AGREEMENTS
Trip contests often involve multiple parties who participate and have an interest in or are participating in the promotion. This may include the destination itself (e.g., destination country), prize partners, co-sponsors, influencers/marketers or other partners.
As such, a key consideration for sponsors of trip contests is the potential liability that may arise by partnering with third parties. In this regard, we are increasingly seeing our clients implement co-sponsor, contest indemnity or influencer agreements to limit risk in larger contests/promotions or in contests with a higher level of potential risk.
We have recently helped a number of different types of clients draft and implement these types of agreements where, for example, a major brand is partnering with less experienced partners or influencers and franchisors that participate in significant promotions with networks of franchisees in regional or nation-wide promotions.
ELECTRONIC MARKETING & CASL
(CANADIAN ANTI-SPAM LAW)
Over the past few years, Canadian federal anti-spam law (CASL) has become a routine consideration for contest sponsors, including those launching and promoting trip contests.
CASL is now commonly a key consideration in trip and other contests, given that it imposes strict consent (e.g., express opt-in), sender identification and unsubscribe requirements.
For example, when engaging in e-mail marketing to contest entrants other than in relation to participation in the contest itself, sponsors generally need to have collected express consent for such other marketing from entrants and also comply with the other core requirements of CASL (i.e., prescribed sender identification information and an unsubscribe mechanism).
Over the past year, the federal CRTC has continued its consistent enforcement of CASL, particularly for failures to comply with consent and other core requirements (see, for example, Recent CRTC CASL (Anti-Spam Law) Enforcement).
As such, contest sponsors that wish to send contest entrants electronic marketing either during or after a contest has concluded, need to ensure that they comply with CASL, including CASL-compliant consent requests for contest entrants.
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.
OTHER TRIP CONTEST CONSIDERATIONS
In addition to the above, contest sponsors should, as with Canadian contests generally, ensure that short rules and full contest terms and conditions are made easily available to potential entrants (e.g., on contest landing pages, social media pages and other marketing) and that draft marketing materials are reviewed before the contest is launched to ensure that they are not false or misleading.
Contest sponsors should also consider any applicable laws relating to jurisdictional requirements (e.g., when operating a contest in Quebec), later marketing (e.g., to ensure compliance with CASL) and intellectual property considerations (e.g., to ensure that the sponsor has wide control over the acceptance and use of any entrant content submitted as part of entering and participating in the contest, such as photographs, videos or essays).
For more information about Canadian contest/sweepstakes laws see: Contests, Contests & CASL, Contest FAQs, Contest/Sweepstakes FAQs, Contest Tips and Contests & Social Media.
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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 legal 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.
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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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