Contests Gone Wild: Controlling the Promotional Contest in Canada

 

 

Have you ever thought about organizing a Bikini Contest to give away a prize? What about organizing any promotional contest?

The reality is, promotional contests are absolutely everywhere.  Canadians love contests, and the contest industry is on a high. It’s almost impossible getting through your day without coming across some advertised contest. Whether you observe them online, on the radio, or on roadside billboards, the laws governing how these contests must run are crucial for every advertiser to be aware of in order to avoid severe criminal and civil penalties in the event of legal shortfalls.

The main laws that govern Promotional Contests in Canada are found in the Criminal Code and the Competition Act.

 

Criminal Code

Section 206 of Criminal Code makes it a criminal offence to operate “illegal lotteries”. Despite the section’s antiquated complexity, an illegal lottery would include the presence of a  prize, chance and consideration (something of value provided by contestants in exchange for participation).

Given this situation, many contest promoters take legal precautions to distance their contest from falling within the realm of an “illegal lottery”. This is often accomplished by removing the element of chance or consideration. The element of consideration (i.e. giving value in exchange for entering) is typically removed from the contest by indicating  that “no purchase is necessary”. The element of chance can be removed from the contest by making the contest one based on skill (rather than chance alone) or by adding a skill-testing question, which imports an element of skill.

 

Competition Act

The main section under the Competition Act relating to contests promotions is 74.06. This section provides that there should be adequate and fair disclosure of the number and approximate value of prizes, the areas to which they relate (i.e. any regional allocation of prizes), and any fact within the knowledge of the advertiser that materially affects the chances of winning (such as the mechanics of the contest and the odds of winning).

The Competition Bureau requires that contest promoters/sponsors engage in adequate and fair disclosure by making available a short list of contest details for potential entrants. This includes: the number and approximate retail value of prizes; the regional allocation of prizes, if applicable; if within the knowledge of the advertiser, the chances of winning and any other fact that materially affects the chances of winning; the requirement to answer correctly a skill-testing question; the contest closing date; information that no purchase is necessary; and the place where the full contest rules are available.

For $1000.00, the Competition Bureau provides a service where contest rules and details can be reviewed by it in exchange for a binding opinion on whether or not the contest provides the Bureau with sufficient grounds to commence an inquiry.

 

Contests in Quebec

Running a contest in Quebec requires compliance with additional Quebec laws. It is not uncommon for many contest advertisers to  exclude Quebec residents altogether from participation in their contests to avoid the additional legal requirements imposed by Quebec law. For example, Quebec law requires that the materials must be available in French; notice of the contest, together with the applicable duties, a copy of the contest rules, and the text of any advertisement used in the contest must be filed in advance with the Quebec Government; the contest rules must contain certain prescribed information amongst numerous other requirements.

If you plan on running a contest in Quebec, be prepared to comply with the additional laws.

 

Conclusion

In addition to Civil and Criminal sanctions for non-compliance with the law, a contest advertiser should also be mindful of the negative publicity that may become associated with them should an investigation into their promotion take place.

Getting your contest onside with the law can pay big dividends in the long run despite the initial legal fees.

 

 

 
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