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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Promotional contests in Canada are largely governed by the federal Competition Act, Criminal Code and contract law. Other laws can also apply depending on the type of contest, including privacy, anti-spam and intellectual property law.
In addition, one of the areas of law that has affected contests the most over the past several years is CASL – Canada’s federal anti-spam legislation. For more information about CASL, see: CASL (Canadian Anti-spam Law), CASL Compliance, CASL FAQs, CASL Compliance Errors and CASL Precedents and Checklists.
In general, CASL requires express or implied consent to send “commercial electronic messages”. CASL also imposes specific form (i.e., disclosure) and opt-out (i.e., unsubscribe) requirements. CASL has significantly impacted the way companies, individuals and other types of organizations engage in electronic marketing in Canada.
For promotional contests, CASL can be relevant in a number of ways, including where an existing marketing list is used to market a promotion, e-mail addresses are collected for later electronic marketing, where electronic communication is used to administer the contest and for specific types of promotions – for example, contests run in connection with online surveys. Of course, every contest/sweepstakes and promotion is different. which means that the CASL requirements will vary.
Based on the severity of the law, with potential penalties of up to $1 million for individuals and $10 million for corporations, it is important that contest sponsors and their advisors ensure that promotions are CASL compliant.
POTENTIAL CASL ISSUES
THAT CAN ARISE IN CONTESTS
Some potential CASL issues that can arise in connection with running Canadian contests include the following:
Collecting E-mail Addresses For
Post-contest Marketing
Sponsors commonly want to collect e-mail addresses during a contest for subsequent marketing. Contest rules also frequently include language stating that the sponsor may send marketing to entrants.
However, since the introduction of CASL in 2014, sponsors need to take care to ensure that CASL’s consent, identification and unsubscribe requirements are met.
This typically includes ensuring that there is an affirmative, uncoupled express consent on contest entry forms, that the prescribed identification information is included on both entry forms and marketing sent to entrants and that communications include the required unsubscribe option.
One of the most common mistakes I see in this area are rules that merely state that entrants agree to receive marketing, which may be in the short or full contest rules, with no CASL compliant consent request or sponsor identification. In short, this is inadequate to ensure that CASL’s requirements are met.
Using E-mail or Other Electronic Communications
to Administer a Contest
Where contests involve e-mail entries and follow-ups by the sponsor to administer the contest (for example, to notify winners, answer entrant questions, award prizes, etc.), CASL issues can also arise.
The good news for sponsors is that there are CASL exceptions that arguably can be relied on to respond to inquiries by e-mail.
It is a good practice, however, to ensure that any follow-ups to entrant inquiries are limited to the administration of the contest and, for example, that express consent be obtained (as well as the other basic CASL requirements) before engaging in subsequent electronic marketing.
A better practice yet is to obtain express up-front consent to both administer the contest and for subsequent electronic marketing, as well as complying with CASL’s ID and un-subsubscribe requirements.
Specific Types of Promotions
CASL issues can also arise in connection with particular types of promotions, such as surveys. For example, where a survey is run with an incentive (i.e., contest) to respond to questions.
In this context, promoters must take care to ensure that both privacy (e.g., in relation to personal information collected) and CASL (e.g., for subsequent commercial communications) are met in conjunction with the survey.
Contests Marketed to Canadians
(e.g., North America-wide Promotions)
Given that CASL also applies to international marketers marketing to Canadians (e.g., North America wide promotions), it is also necessary for sponsors to ensure that they have met CASL’s requirements to communicate with and send subsequent marketing to Canadian entrants.
American sponsors should be aware that Canadian anti-spam law is different than the U.S. rules in key respects, including requiring express opt-in consent unless an exception applies or a category of implied consent can be relied on.
Consent For Marketing By Identified Third Party
Contest sponsors should be aware that there are specific CASL rules where e-mail addresses are collected on behalf of 3rd parties. For example, a sponsor or contest organizer may want to collect e-mail addresses for use by a co-sponsor or other party.
In general, it is important to comply with CASL’s particular rules governing the collection of electronic addresses for use by third parties, which may include a consent request that includes the third party or sponsor and third party, specified contact information for the parties that will be sending the electronic communications and ensuring that marketing communications include the prescribed identification information for everyone on whose behalf messages are sent.
Potential Affiliate or Third Party Marketer Risk
One final area where CASL issues can arise in connection with contests relates to affiliate or third party marketer risk.
Given that it is very common for brands to co-sponsor contests (e.g., with companies providing prizes) or engage third party marketers, it is important for sponsors to consider the potential risk that a co-sponsor or affiliate marketer will violate CASL, which may lead to potential liability for the sponsor.
One risk mitigation option in this area is to enter into agreements with co-sponsors or affiliate marketers, ensuring that they agree to comply with CASL and with risk-shifting provisions in the event they do not (e.g., indemnity provisions in favour of the sponsor). Some of my clients have developed forms of agreement that they use or adapt for promotions involving co-sponsors or other third parties.
From a practical perspective, it is generally very important to discuss how a contest will be promoted with any marketing or other partners and evaluate both their understanding of CASL and commitment to compliance.
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CANADIAN CONTEST LAW TIPS
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 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 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 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 matches 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.
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 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 LAWS
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
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
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
