You planned the perfect contest. Great prize, strong engagement, your audience is excited. You hit “post,” and then months later, you get a letter from the Competition Bureau.
Sound far-fetched? Not necessarily. Following a recent news release from the Competition Bureau of Canada, businesses and influencers (each, a “Contest Sponsor”) offering promotional contests may see increased enforcement attention from regulators and should, therefore, ensure their contests are reviewed for compliance.
The news release included reminders about key legal obligations under the Competition Act applicable to Contest Sponsors with respect to the administration of their promotional contests in Canada. The Competition Bureau affirmed its position on the mandatory information that Contest Sponsors must disclose to contest participants and cautioned against providing false or misleading contest information. Consumers were reminded that they can use the Competition Bureau’s self-reporting mechanism if they believe they have encountered a deceptive promotional contest.
This article reviews the common types of promotional contests in Canada, outlines the key requirements under the Competition Act and the Competition Bureau’s Enforcement Guidelines, and discusses what other legal obligations may apply and what you need to have in place before your next promotion goes live.
Common types of promotional contests
A promotional contest is any contest, lottery, or game where a product or benefit is given away through chance, skill, or a combination of both. Common types of promotional contests encountered by consumers include giveaways and sweepstakes. Giveaways generally involve the awarding of prizes based on skill, chance, or both, while sweepstakes are a subset of giveaways in which winners are selected at random from all eligible entries, though we often see both terms used interchangeably. Regardless of whether a promotion takes the form of an “enter to win” contest or an influencer giveaway on social media, all such activities are subject to promotional contest requirements under the Competition Act and Criminal Code and fall within the purview of the Competition Bureau’s enforcement authority.
Requirements under the Competition Act and Criminal Code
Section 74.06 of the Competition Act requires Contest Sponsors to supply consumers with adequate and fair disclosure. This is generally done through contest rules. Further, the Criminal Code’s illegal lottery provisions prohibit operating a lottery-style scheme that combines offering a prize for consideration to enter games of chance or mixed chance and skill, unless provincially authorized.
As a result, promotional contests are typically structured to:
- Always provide a “no purchase necessary” means of entry (e.g., offering an essay mail-in method of entry); and
- Introduce a skill-testing requirement for potential prize winners (e.g., a simple math question involving addition, subtraction, multiplication, and division components).
Lastly, the Competition Act requires that the selection of participants and the distribution of prizes must be made on the basis of skill or on a random basis. Once winner(s) have been selected, the distribution of prizes must not be unduly delayed. While the Competition Act does not dictate a particular time period, the Competition Bureau’s position is that the prize distribution must take place within “a reasonable period of time.” This would likely depend on the nature of the contest and prize.
Any contravention of the requirements under the Competition Act is considered reviewable conduct and the Competition Bureau may start an investigation into the promotional contest. As mentioned above, consumers may self-report any promotional contests they believe to be deceptive and contrary to the Competition Act by telephone or online form.
What has to be in your contest rules and where do they have to appear?
Contest rules must be easily accessible to participants and must contain all essential contest information, including how to enter the contest and how the winners will be selected (e.g., through chance or by a skill-based method).
All contest details provided to consumers must be true and not contain false or misleading claims. Generally, promotional contests will have:
- a full set of rules, which provide detailed information about how the contest will function, and
- a corresponding set of mini rules that must appear on all advertising and promotional materials related to the contest (including product packaging, social media posts, and other communications).
Mini rules are legally required, while full rules are typically for the protection of the Contest Sponsor and also work to provide more contest administrative information to the consumer.
What mini rules must contain?
The mini rules should contain at a minimum:
- the number and value of prizes;
- any regional allocation of prizes;
- the skill testing question;
- details as to the chances of winning;
- the contest closing date;
- a “no purchase necessary” statement with a link to the full rules; and
- any other fact known to the advertiser that materially affects the chances of winning.
This approach ensures compliance with the Competition Bureau’s guidance and applicable law, while supporting transparency in promotional contests.
Other laws applicable to promotional contests
In addition to the Competition Act and the Criminal Code, a promotional contest must comply with other applicable federal and provincial laws. These laws are often overlooked by Contest Sponsors but are also critical in ensuring compliance with Canadian requirements. These include:
- Privacy laws: Collecting participant names, email addresses, and mailing addresses to administer your contest? That’s the collection of personal information under Canada’s Personal Information Protection and Electronic Documents Act (“PIPEDA”). PIPEDA applies to any commercial activity that involves the collection, use, and disclosure of personal information. It requires the knowledge and consent of a consumer to be obtained prior to the collection, use, and disclosure of their personal information, subject to limited exceptions.
The collection of personal information should be limited to that information necessary for the purposes of the promotional contest. Contest sponsors should also understand the additional obligations that PIPEDA imposes on businesses that handle personal information, particularly those involving security safeguards and individuals’ access rights. Additionally, certain provinces have their own privacy laws that may apply to the contest. - Canada’s anti-spam laws (“CASL”): If Contest Sponsors intend to send commercial communications to their clients, including information regarding the contest, through electronic means (e.g., text, voice, or email) then Canada’s anti-spam legislation applies. Importantly, obtaining express consent or, where permitted, implied consent, from consumers before sending commercial electronic messages (“CEMs”) is necessary. CASL also provides requirements for the content of any CEMs to consumers, including setting out an unsubscribe mechanism.
- Social media platform rules: Facebook, Instagram, TikTok, and other platforms each have their own terms and conditions for promotional content. These rules vary by platform and change frequently. If offering a promotional contest through social media, specific platform rules should be consulted to ensure compliance.
- Influencer marketing disclosure: Where influencers promote or administer contests, sponsorship relationships must also comply with disclosure requirements regarding material connections as required under the Competition Act and outlined in Canadian Ad Standards’ Interpretation Guidelines.
- French language requirements: Quebec previously enforced its own regime related to promotional contests, which has since been repealed. However, if the promotional contest is being offered to Quebec residents, Contest Sponsors must still comply with the Charter of the French Language, which requires that all contest information be published in French. A translation may accompany the French inscription, but no translation may be given greater prominence or more favourable terms than the French inscription.
A pre-launch compliance checklist for your next contest
Before your next promotion goes live, run through these checkpoints:
Structure
- Free, no-purchase-necessary entry method is available.
- Skill-testing question is required for prize claim.
- Prize delivery timeline is defined in the rules and occurs within a reasonable period of time.
Rules documentation
- Full contest rules that provide detailed information about how the contest will function.
- Mini rules contain all required elements:
- the number and value of prizes;
- any regional allocation of prizes;
- the skill testing question;
- details as to the chances of winning;
- the contest closing date;
- a “no purchase necessary” statement with a link to the full rules; and
- Rules contain any other fact known to the advertiser that materially affects the chances of winning.
- Mini rules are applied to ALL advertising and promotional materials.
- All prize information is accurate and not misleading.
Additional legal layers
- PIPEDA consent is collected at entry and data collection is limited to what’s necessary. Compliance with all additional PIPEDA requirements.
- CASL consent is obtained separately if participants will receive CEMs. The CEMs must contain all necessary inclusions, such as an unsubscribe mechanism.
- Platform terms have been reviewed for every platform used to promote or administer the contest.
- Influencer material connections are disclosed clearly and prominently.
- All contest materials are available in French if Quebec residents are eligible.
Key takeaways
A giveaway looks simple from the outside. A few posts, a prize, a winner. But the legal infrastructure behind a compliant Canadian promotional contest spans federal competition law, criminal law, privacy law, anti-spam law, platform terms, influencer disclosure rules, and Quebec language requirements.
The recent news release from the Competition Bureau serves as a reminder that promotional contests remain an area of active regulatory interest. Contest Sponsors should review existing and planned contests to ensure they are fully compliant with applicable laws to mitigate the risk of investigation and enforcement action.
Should you have questions about your upcoming promotional contests, please contact Miller Thomson’s Marketing, Advertising and Product Compliance lawyers.
