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May 15, 2020

Over the past several weeks, a marketing law trend that is emerging in my practice has been increased demand to work on destination marketing contests (i.e., contests promoting trips, vacations and adventures to particular destinations).  This may seem slightly counterintuitive, but I have been contacted by several brands and local and international governments in relation to destination contests, presumably anticipating an easing of local and international COVID-19 travel and other restrictions. 

Some destination brands, it seems, want to get ahead of the curve to keep their countries and local tourist destinations top of mind and aim to drive visitor traffic as travel restrictions cautiously ease around the world.  Given the apparently increased interest in destination contests, 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 with governments and agencies).

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, contest 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 be the case with marketing for other types of contests (i.e., contest marketing must not be false or misleading).

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.  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.  It can also be important to either describe or link any material terms and conditions of travel agencies or airlines involved in the contest.

Winner Selection: In general, destination or trip contests are no different than other types of promotional contests in terms of 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 random draw, 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).

Sponsor Liability and Risk: Contest sponsors commonly require entrants to agree to and complete winner release forms as part of the promotion.  For destination and trip contests, which typically involve more risk, 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, 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 or trip contests where the prize includes a trip for a minor companion, the rules should, as with any other companion, require that they are required to complete the sponsor’s release form.  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, trip contests, aside, one of the reasons that many promotions are restricted to entrants that 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 against a minor winner in the event an issue arises.

Canadian 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 can “share” the contest with friends or family for additional entries. Given the potentially severe penalties for violating CASL, which include administrative monetary penalties of up to CDN $10 million, it is important for contest sponsors to ensure that they comply with CASL for electronic marketing related to promotional contests open to Canadians including trip/destination contests. 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.

Other Considerations: Of course, in addition to the above considerations for trip and destination contests, sponsors should ensure that they have as usual good short (or mini) rules, full contest terms and conditions that reflect the contest and that their draft marketing materials are reviewed for potential misleading advertising issues.

For more information about Canadian contest/sweepstakes laws see: Contests, Contests & CASL, Contest FAQs, Contest Tips and Contests & Social Media.

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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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Legal Tips For Running
Contests/Sweepstakes in Canada

The following are key legal tips for running 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 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 can “share” the contest with friends or family for additional entries. Given the potentially severe penalties for violating CASL, which include administrative monetary penalties of up to CDN $10 million, it is important for contest sponsors to ensure that they comply with CASL for electronic marketing related to promotional contests open to Canadians including trip/destination contests. 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 Considerations. 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.

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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, 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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    buy-contest-form Templates/precedents and checklists to run promotional contests in Canada

    buy-contest-form Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)

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