The basics of contest law in Canada

Contests are a great way to build awareness and excitement, and increase sales (hopefully). But there are a number of important elements to consider before you put too much effort into your contest development – and well before you have angry entrants brandishing lawsuits.

Avoid your promotion being classified as an “illegal lottery” by removing chance or a purchase requirement. You can remove chance by conducting a skill contest (judges review entries) or adding an element of skill (i.e. skill-testing question). The simplest answer to the purchase requirement is to include a “No Purchase Required” entry option, although there are instances where you can require participants to buy a product. This is complicated however, and best addressed with a contest lawyer.

Meet the requirements of the Competition Act. This requires “adequate and fair” disclosure of certain contest information (i.e. number and value of prizes), distribution of prizes not being unduly delayed, and distribution of prizes based on skill or random selection (i.e. not deliberately selecting a winner).

Draft a rules or terms and conditions document that is comprehensive, super-specific and can stand up in court. Are meals or gratuities included? What happens if no one claims a prize? Are there age/location restrictions on winners? The possibilities are endless. You should have a contest lawyer draft or review this document. If there is any kind of loophole, someone will discover it: Pepsi jokingly included a Harrier jet prize in its “Pepsi Stuff” promotion and ended up in court when someone gathered the required points to win it.

Always anticipate the worst. What happens if a printing error results in 1,000 winning scratch cards? What if a winner has a serious accident on a reward event? What if you have to cancel the promotion? Ensure you have the resources, personnel and knowledge (in-house or a phone call away) to handle the unforeseen. Many things may still go wrong that you could not reasonably have anticipated: a participant in the U.S. radio contest “Hold your wee for a Wii” died from consuming too much water.

There are loads of other fine print, exceptions and opportunities (!) in Canadian contest law such as coupons, incentive programs, online contests, rebates, telemarketing, etc. And there are special requirements if you want to administer your promotion in Quebec. So plan what you can and rely on experts to ensure you are not exposed.

Do you have any contest tips or tricks you can share?

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Contact M