Canadian COMPETITION LAW

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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In my inbox this morning was a newsletter with what I thought was a rather good note by Dale Joerling (Thompson Coburn LLP – St. Louis) on avoiding issues when running a sweepstakes in the U.S.

Given that external and in-house counsel on both sides of the border commonly use check-lists to ensure that the key legal requirements for contests are met, including us, we thought we would reprint (with permission) this quite good article together with our own tips for running a successful contest in Canada.

These two basic checklists for operating contests also highlight some of the jurisdictional differences (i.e., differences in the basic requirements) for contests in Canada and the United States.

“Consult This Checklist Before Promoting Your Next Sweepstakes”

(Dale Joerling – Thompson Coburn LLP)

Kris Kringle had plenty of pointy-shoed helpers backing him up, but he still insisted on making his list and checking it twice.  Any businesses that promote sweepstakes should be just as vigilant about double-checking all elements of their promotions before releasing them to the general public.

To that end, I’ve created a checklist of 12 of the most important things to look for in these types of promotions.

While this checklist covers many of the key aspects of a sweepstakes, it is no guarantee that the sweepstakes complies with all of the various state and federal statutes and regulations that may apply.  Also, the checklist is not legal advice.  The only way to determine if a sweepstakes complies with all applicable laws is to have it reviewed by a lawyer familiar with sweepstakes law.

Sweepstakes Checklist

1.  Is the sweepstakes limited to residents of the U.S. or one or more states or cities within the U.S.?

2.  Do the eligibility requirements for entrants clearly identify the age, residency, and other requirements for entrants to be eligible?

3.  Must individuals be at least 13 years old to enter?

4.  Is there a way to enter the sweepstakes by simply mailing a postcard with the entrant’s contact information to the sponsor?

5.  Are the odds of winning clearly set forth in the rules and are they equal for everyone who enters, including the mail-in entrants?

6.  Are the prizes described precisely and do they include all aspects and details, including the Approximate Retail Value for the total prize?

7.  Is the method of selecting the winner explained and is there a date and time stated for when the winner will be chosen?

8.  Is the sponsor’s name, address, phone number and web address listed prominently in the official rules and on all advertisements pertaining to the sweepstakes?

9.  Is the statement “No Purchase Necessary” and “Void Where Prohibited by Law” displayed in the rules and in all advertisements?

10.  Is the value of prize less than $5,000?

11.  Are employees of the sponsor prohibited from entering the sweepstakes?

12.  Is there an end date and time listed in the rules, and are the number of entries that each person may submit clearly stated?

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Legal Tips For Running
Contests/Sweepstakes in Canada

The following are key tips for operating legal contests/sweepstakes 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 a prize).

Short 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 Forms & Precedents.

Long 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 details of the contest as clearly as possible – for example, eligibility requirements, how to enter, prize descriptions, number and values, draws and award of prizes, odds of winning and indemnifying and releasing the contest sponsor and any co-sponsors or prize sponsors.  Standard precedents, or rules downloaded from the web rarely accurately reflect a particular promotion. In this regard, 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 Forms & Precedents.

Winner Release Forms. Consider using winner release forms for contest winners. While not required by law in Canada, winner releases 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 prize award. Winner releases 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 releases for both winners and any travel companions (and guardian releases for minors). For more information, see: Canadian Contest Forms & Precedents.

Misleading Advertising.  Ensure that advertising and marketing materials are not false or misleading (i.e., comply with the general misleading advertising sections of the Competition Act).  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 collateral matches the contest rules and that key 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.

Canadian Anti-spam Law (CASL). Comply with Canada’s federal anti-spam legislation (CASL). CASL is often relevant when running contests or other types of promotions in Canada, including if electronic distribution lists will be used to market the contest/promotion, the contest/promotion will include the collection of e-mails for marketing unrelated to administration of the promotion, if participants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers) or participants are encouraged or required to “share” information about the promotion with friends or family. Given the potentially severe penalties for violating CASL, which include administrative monetary penalties of up to CDN $10 million, it is important for those running contests or other promotions in Canada to ensure that they comply with CASL for electronic marketing related to a promotion. 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: Anti-Spam Law (CASL) Precedents.

Quebec Contest Law.  Ensure that Quebec legal requirements are met for contests run in Quebec (or take care to make sure that eligibility is limited to Canadian residents, excluding Quebec). In general, opening contests to Quebec residents requires regulatory filings with the Regie in Quebec, the payment of a duty or tax (which depends on the value of prizes), translation of contest rules and advertising and in some cases posting a bond/security.

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 or promotion. 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. See: Guidelines For Consumer Generated Content Contests.

U.S. Advice.  Seek U.S. legal advice if the contest will be open to U.S. residents or limit the contest to only Canadian residents.

Social Media Site 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 & Advertising Rules.  Consider whether other competition or advertising law rules may apply. For example, in addition to a stand-alone contest provision, the Competition Act also contains provisions governing deceptive prize notices, general misleading advertising and telemarketing that involves prizes.

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SERVICES AND CONTACT

We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.

Our experience includes advising clients in Toronto, across Canada and the United States on the application of Canadian competition and regulatory laws and we have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.

To contact us about a potential legal matter, see: contact

For more information about our firm, visit our website: Competitionlawyer.ca

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