Contests and CASL

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.

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OVERVIEW OF CONTESTS AND CASL
(CANADIAN ANTI-SPAM LAW)

Promotional contests in Canada are largely governed by the federal Competition Act (disclosure requirements and accurate advertising), Criminal Code (Code) (avoiding the Code’s illegal lottery offences) and contract law (contest rules and forms).

Other laws that can also apply depending on the type of contest, include privacy law, intellectual property law and if a contest will open to Quebec residents, Quebec provincial law.

In addition to the above, one of the areas of law that has most affected contests since it came into force in 2014 is CASL (Canadian federal anti-spam legislation).

In general, CASL requires express or implied consent to send unsolicited “commercial electronic messages” (CEMs) to Canadians. CASL also imposes certain sender identification and unsubscribe requirements.

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.

For more information about CASL, see: CASL (Anti-Spam Law), CASL Compliance Errors, CASL Compliance Tips and CASL FAQs.

KEY CASL ISSUES
THAT CAN ARISE IN CANADIAN CONTESTS

Some of the key CASL issues that can arise in connection with running contests in Canada include:

Using E-mail Addresses For
Marketing Unrelated to the Contest

Contest sponsors commonly want to collect e-mail addresses during a contest for marketing unrelated to the contest or marketing after the contest ends. 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 for contest entrants to agree to receive non-contest related marketing, that the prescribed sender identification information is included on both contest entry forms and marketing sent to entrants and that all electronic communications include a CASL-compliant un-subscribe mechanism.

One of the most common mistakes we see in this area are rules that merely state that entrants agree to receive marketing, which language may be in the short or full contest rules, with no CASL compliant consent request or sponsor identification to have contest entrants agree to receive marketing in addition to the administration of the contest.

For more information, see: CASL Compliance Errors and CASL Compliance Tips.

Using E-mail or Other Electronic Communications
to Administer a Contest

Where contests involve e-mail entries and follow-ups by the contest sponsor to administer the contest (e.g., to notify winners, answer entrant questions, award prizes, etc.), CASL issues can also arise.

The good news for sponsors is that there is a CASL exception that can be relied on to respond to inquiries by contest entrants (e.g., who respond to marketing and voluntarily opt to provide their e-mail address as part of the contest entry process).

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 to engage in any unrelated marketing or marketing after the contest closes.

A better practice yet is for contest sponsors to obtain express up-front consent from contest entrants to both administer the contest and for any additional electronic marketing.

For more information, see: CASL Compliance Errors and CASL Compliance Tips.

Surveys, “Friends and Family” Promotions
and Other Specific Types of Contests/Promotions

CASL issues can also arise in connection with some specific types of contests/promotions, such as where surveys are run in connection with contests and “friends and family” type promotions.

With respect to surveys run in connection with an incentive (i.e., contest) to respond to survey questions, contest sponsors should ensure that CASL requirements are met in administering the survey, including that the sponsor has consent to send e-mails to participants for the survey and that other basic CASL requirements are met, including sender identification in e-mails and including a CASL-compliant un-subscribe mechanism.

With respect to “friends and family” type contests/promotions, some marketers run these types of promotions – for example, offering additional contest entries to entrants that share the details of the contest with friends or family or running an internal company promotion and asking that company personnel share the details of the promotion with friends and family.

Marketers should be aware, however, that while there is an exception to the unsolicited CEMs section of CASL (section 6) for messages sent to a person with whom they have a personal or family relationship, these terms are very specifically defined.  For example, “family relationship” is limited to spouses, common-law partners and parent-child relationships. “Personal relationship” is defined in a multi-factor and case-by-case fashion, such that it is often impractical to rely on this exception for any broad “friends and family” type promotion.

In this regard, marketers need to be aware that there is potential risk in running friends and family type promotions if they cannot ensure that the specific definitions of “family relationship” and/or “personal relationship” under CASL can be met for recipients of electronic messages.

As such, marketers could, depending on the type of promotion, essentially be assisting participants in a promotion violate CASL by encouraging electronic marketing for the promotion to third parties from whom consent has not been obtained and no CASL exception applies.

For more information, see: CASL Compliance Errors and CASL Compliance Tips.

International Contests
Marketed to Canadians

Given that CASL also applies to international marketing to Canadians – for example, North America wide contest/promotions that include Canada – it is also important for sponsors to ensure that they have met CASL’s requirements to communicate with and send electronic marketing to Canadian contest 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 one of the categories of implied consent under CASL can be relied on.

For more information, see: CASL Compliance Errors and CASL Compliance Tips.

Consent For Marketing by Third Parties

Contest sponsors should be aware that there are specific CASL rules where e-mail addresses are collected on behalf of third parties. For example, a sponsor or contest organizer may want to collect e-mail addresses to be used by an affiliated company, affiliate marketers, influencers or others.

It is important to comply with CASL’s specific 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.

Marketers should also be aware that there are different rules under CASL for the collection of consent for identified third parties (i.e., other marketers whose identities are known at the time of requesting consent) and unidentified third parties (i.e., marketers who are unknown when consent is request but the person requesting consent wants a blanket consent on behalf of).

For more information, see: CASL Compliance Errors and CASL Compliance Tips.

Affiliate Marketers / Third Party Marketers Risk

One final area where CASL issues can arise in connection with contests relates to affiliate marketers or other third party marketers with whom a person collecting consents may cooperate in a promotion.

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 not only for the third party but also for the sponsor.

One risk mitigation option 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 our clients have developed forms of agreement that they use for promotions involving co-sponsors or other third parties (i.e., indemnity or co-sponsor agreements).

For more information, see: Influencer/Co-Sponsor Agreements.

For information about the Contest Indemnification Agreement precedent that we offer for sale, see: Contest Forms/Precedents II.

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Legal Tips For Running
Contests/Sweepstakes in Canada

The following are some 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 (i.e., 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 and 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 and 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 and 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 and 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 asked or incentivized (e.g., with bonus contest entries) to “share” the contest/promotion with friends or family. Given the potentially severe penalties for violating CASL, which include administrative penalties 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 CASL checklists and precedents that we offer for sale to comply with CASL, see: CASL Checklists and Precedents.

Quebec Laws. Ensure that Quebec laws 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 Canadian 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 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