Destination contests/sweepstakes (i.e., trip contests) are popular marketing tools – for example, where a private sponsor wants to increase sales by offering a significant prize in a contest or a national or local government wants to generate increased tourism related business.
We have advised many local and international governments, travel and tourism entities and other sponsors on the key aspects of running trip contests open to Canadian entrants.
In general, when running a promotional contest in Canada, it is important that sponsors and any co-sponsors or marketing partners comply with key Canadian contest laws, including the federal Criminal Code, Competition Act and CASL (Canadian anti-spam law).
For more information about Canadian contest law, see: Contests.
The following is a short overview of trip contests with some key Canadian legal considerations for contest sponsors, co-sponsors and agencies.
TRIP PRIZES
The main difference between trip contests, compared to other types of contests, is the type of prize. In trip contests, sponsors award a trip or vacation, often as the grand prize, which may be (and often is) combined with other types of secondary prizes.
Trip prizes can be awarded in a variety of ways, including cash, a trip gift certificate or voucher from a travel agency or airline or as arranged by the contest sponsor.
Given that contest rules are contracts, sponsors can broadly determine how many and what kind of prizes are awarded (e.g., a trip for a single winner, trip for a winner and travel companion, etc.). In Canada, however, certain statutory disclosure requirements must be met under section 74.06 of the Competition Act, 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, not accurately describing a prize or failing to disclose important conditions or limitations associated with redeeming a contest prize, whether a trip or other type of prize).
For more information, see: Misleading Advertising.
TRIP PRIZE DESCRIPTIONS
Another key difference between trip contests and other types of contests is the description of prizes in contest rules and marketing materials.
Given that trip prizes are commonly larger value than other types of prizes, and the misleading advertising risk of failing to accurately describe the prize, additional care should be taken when describing a trip prize 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 (e.g., based on departure location), whether it is being awarded as a trip arranged by the sponsor or awarded in some other way (e.g., as cash, gift certificate, travel voucher, etc.), any key restrictions (e.g., blackout periods), who chooses the details of the trip, whether the prize is for only the winner or a winner and travel companion, limitations on additional expenses, describing an alternative prize in the event the trip prize cannot be awarded (e.g., travel dates are unavailable) and a deadline to redeem the prize.
WINNER SELECTION
In general, trip contests are similar to other types of promotional contests with respect to winner selection.
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 entries (e.g., through competing photos, videos, essays or other creative submitted by entrants) or a combination of different types of entry and winner selection (e.g., skill-based entries that are judged, a selection of finalists and a winner selected by random draw).
TRIP WINNER RELEASE FORMS
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 the release language in both contest rules and winner release forms themselves be fulsome to address potential risks for the sponsor, co-sponsors, partners and others involved in the organization and promotion of the contest.
In addition, if a trip prize will include a travel companion (i.e., in trips for two or more people), contest rules should require the winner to also return a completed and signed companion release as a condition of awarding the prize.
MINOR TRIP 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 companion release form, but also a guardian release if the travel 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.
In addition, with respect to minor contest entrants, one reason that many promotional contests are restricted to entrants who are age of majority is because contest rules are contracts and minors may not be able to legally enter into contracts (i.e., there is a risk that if a minor wins a prize, and any issues arise, the contest rules may not be enforceable against the minor).
CO-SPONSOR AGREEMENTS
Trip contests sometimes involve multiple parties who participate and have an interest in or are participating in the promotion. This may include a national or local government tourism authority, prize partner(s) (i.e., the entity contributing the trip prize, such as a travel agency or airline), 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 a promotion. In this regard, we are increasingly seeing our clients implement co-sponsor, contest indemnity or influencer agreements to limit the risk associated with co-sponsors or other contest partners.
We have helped many clients draft and implement co-sponsor and other related types of agreements where, for example, a major brand partners with less experienced parties or influencers and franchisors that participate in a promotion with franchisees in national or regional contests.
For more information, see: Influencer and Co-Sponsor Agreements.
ELECTRONIC MARKETING AND CASL
(CANADIAN FEDERAL ANTI-SPAM LAW)
Canada’s federal anti-spam legislation (CASL) is often relevant when running contests and promotions in Canada.
CASL can be relevant if, for example, electronic distribution lists will be used to market the contest, the contest will include the collection of e-mails for marketing unrelated to the 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 asked or incentivized (e.g., with bonus contest entries) to “share” the contest with friends and family.
Given the potentially severe penalties for violating CASL, which include administrative monetary penalties (AMPs) of up to CDN $10 million, it is important to ensure that CASL is complied with for electronic marketing related to contests or other promotions 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 to comply with CASL, see: CASL Checklists and Precedents.
OTHER TRIP CONTEST LAW CONSIDERATIONS
In addition to the above, contest sponsors should, as with Canadian contests generally, ensure that short (i.e., mini) and full contest rules are made easily available to potential entrants (e.g., on contest landing pages, social media pages and in 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 other applicable laws relating to specific jurisdictional requirements (e.g., when running a contest also open to U.S. or other international entrants), later electronic marketing (e.g., to ensure compliance with CASL) and intellectual property considerations (e.g., to ensure that the sponsor has broad rights to use any content submitted by entrants such as photographs, videos or essays in skill-based contests).
For more information about Canadian contest/sweepstakes laws see: Contests, Contests & CASL, Contest/Sweepstakes FAQs, Contest Tips and Contests & Social Media.
*****************
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.
********************
SERVICES AND CONTACT
We are a Toronto based Canadian competition and advertising law firm that helps clients in Toronto, Canada and the United States 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.
Our 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. We 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 our services, see: services
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
