Canadian COMPETITION LAW

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 and 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 (mandatory statutory disclosures and ensuring that marketing is not false or misleading), federal Criminal Code (Code) (avoiding the Code’s illegal lottery offences under section 206) and the common law of contract (which governs contest rules).

Other laws that can also apply depending on the type of contest, include privacy law and intellectual property law.

In addition, one of the laws that has most affected contests since it came into force in 2014 is CASL, which is Canada’s 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 the 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 bonus entries) to “share” the contest information 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 very important for contest sponsors to ensure that they comply with CASL for all electronic marketing related to promotional contests open to Canadians.

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

KEY CASL RELATED ISSUES
THAT CAN ARISE IN CONTESTS

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

USING E-MAIL ADDRESSES COLLECTED FOR
MARKETING UNRELATED TO THE CONTEST

Contest sponsors commonly want to collect e-mail addresses during a contest for marketing unrelated to the contest during the contest or after a contest closes. 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 ensure that CASL’s consent, identification and unsubscribe requirements are met to send entrants marketing that is unrelated to the administration of the contest.

This typically includes ensuring that there is a positive, uncoupled express consent request on contest entry forms and landing pages for contest entrants to agree to receive non-contest related marketing, that the prescribed sender identification information is included on both contest entry forms/pages and CEMs sent to entrants and that all CEMs include a CASL-compliant un-subscribe mechanism.

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

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

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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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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.

Helpfully for contest sponsors, there is a CASL exception that can often be relied on to respond to inquiries by contest entrants (e.g., entrants that respond to marketing and voluntarily opt in 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 unless express consent to send additional CEMs has been obtained (e.g., to engage in any unrelated electronic 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 CEMs the sponsor may want to send to entrants.

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

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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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SURVEYS, “FRIENDS AND FAMILY” CONTESTS
AND OTHER TYPES OF CONTESTS

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

Surveys Run in Conjunction with Contests

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 entrants for the survey and that other basic CASL requirements are met, including sender identification in CEMs and including a CASL-compliant un-subscribe mechanism in CEMs sent to entrants.

“Friends and Family” Type Contests/Promotions

With respect to “friends and family” type contests/promotions, some marketers run these types of promotions – for example, offering bonus contest entries to entrants that share the details of the contest with friends or family or running an internal company promotion and asking 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 electronic messages sent to a person with whom they have a personal or family relationship, these terms are very specifically defined under CASL (i.e., they are not “blanket” exceptions for any and all types of family or friends).

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.

As such, marketers need to be aware that there is potential risk for both them as contest sponsors and entrants as well 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 CEMs.

In this regard, sponsors could, depending on the type of call to action for entrants, essentially be assisting contest entrants violate CASL by encouraging electronic marketing for the promotion to third parties from whom no CASL compliant consent has been obtained and no CASL exception applies.

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

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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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INTERNATIONAL CONTESTS MARKETED
TO CANADIAN ENTRANTS

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 CEMs to Canadian contest entrants.

For example, American contest sponsors should be aware that Canadian anti-spam law is different than the U.S. anti-spam law in key respects, including requiring express opt-in consent unless one of the types of implied consent under CASL or a CASL exception can be relied upon.

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

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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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COLLECTING CONSENT FOR THIRD PARTIES
TO SEND ENTRANTS CEMS

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

It is important to comply with CASL’s specific rules governing the collection of electronic addresses for use by third parties.

This may include, among other things, a consent request that includes the name of the third party (or third parties), the third party’s contact information and which party is requesting consent and on whose behalf consent is being requested. In this regard, CASL requires that very specific information be included in consent requests on behalf of third party senders.

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 when consent is being requested) and unidentified third parties (i.e., marketers who are unknown when consent is requested, such as future marketing partners or affiliate marketers).

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

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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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AFFILIATE MARKETERS / THIRD PARTY
MARKETERS RELATED RISK

Another 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 prize sponsors) 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 marketer but also for the contest 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 contests/promotions involving co-sponsors or other third parties (e.g., indemnity or co-sponsor agreements).

For more information, see: Influencer Agreements. For information about the Contest Indemnification Agreement precedent that we offer, see: Contest Precedents II.

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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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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