The main elements to legally run a contest/sweepstakes in Canada are as follows:
Short Rules: “Short rules” (sometimes also called “mini-rules”) include the basic statutory disclosures required by section 74.06 of the Competition Act and other material terms that should be brought to the attention of potential contest entrants. Short rules are typically posted on the footer of a contest landing page, on the footers of other web or social media marketing pages and in any point-of-purchase marketing materials (e.g., on-package or in-store marketing, posters, in-store marketing, etc.).
Long Rules: “Long rules” (sometimes also called “Full Contest Rules” or “Official Contest Rules”) are the full terms and conditions (i.e., “T’s & C’s”) for a contest that set out all of the key terms for a contest, including eligibility (i.e., who can enter and from where), what is required to enter the contest, prizes (including number and approximate retail values), odds of winning, whether a skill-testing question is required and how winners will be selected (e.g., by way of random draw, instant win or a judged skill-based contest).
Winner Release Form: Winner release forms are not legally required for contests/sweepstakes run in Canada, but are commonly used by contest sponsors. Winner releases are particularly important for contests where prizes of significant value are being awarded or where there is more potential risk (e.g., for trip and destination contests where plane trips or travel may be included). For destination/trip contests, contest sponsors should use both a winner release and companion release form (i.e., to obtain releases from both the winner of the contest and any guest/companion). Also, for destination/trip contests, contest sponsors should also use a guardian release form (i.e., in the event that a travel companion is a minor and cannot legally contract by law).
Skill-testing Question: Canadian contest sponsors commonly use skill-testing questions for potential contest winners. This is because, for pure chance contests (e.g., random draw contests), it is necessary to add some level of skill to avoid many of the pure chance related illegal lottery sections of the federal Criminal Code (sections 206(1)(a)-(d) of the Criminal Code). Skill-testing questions are not required for potential winners of pure skill contests (e.g., essay, photo or other types of competitions where winners compete based on pure skill and the contest/sweepstakes is judged).
A No-Purchase Required Entry Option: In Canada, many of the illegal lottery offences under section 206(1) of the Criminal Code involve a purchase (or other consideration), chance and a prize. Like including a skill-testing question, no purchase required entry options are intended to avoid many of the Criminal Code’s illegal lottery offences, as well as avoid one element of section 206(1)(f) of the Criminal Code. There is an argument that a purchase can be required for some times of contests, but contest sponsors should be cautious in this area and get competent legal advice.
Comply With 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 promotional contest that is 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.
Other Canadian Contest Laws & Rules: It is also advisable for Canadian contest sponsors to have their draft creative / marketing materials reviewed for Competition Act misleading advertising compliance and whether any other laws may apply to a particular contest (e.g., intellectual property laws relating to the use of third party or entrant submitted content and privacy law). Also, some social media platforms (e.g., Facebook and Instagram) require that specific disclaimer language be included in contest rules and winner releases for contests marketed or promoted on their platforms.
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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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