Promotional Contests – YOU COULD WIN! …but know the rules.

Promotional contests are often used by companies to bring attention to their business, products and services. However, when proposing to conduct a contest, it is important to understand the applicable legal rules and regulations to ensure that your contest does not contravene the law. This article will focus on the provisions of the Competition Act (the “Act”) that apply to contests.

Contests, themselves, are not prohibited under the Act; instead, Section 74.06(a) of the Act prohibits any promotional contest where fair and adequate disclosure of the contest information and rules is not made. At a minimum, the following information must be provided:

1. The number and approximate value of the prizes. Generally, this means providing entrants with the regular market value of the prize. Where such a value is difficult to determine (i.e., the value of a prize that involves a trip from the winner’s home to New York may depend on where the winner is located), the range of possible values of the prize(s) should be disclosed.

 

1. The area(s) to which the prizes relate. If a contest is being run on a national basis, but three prizes are allocated for winners from Quebec, while only one prize is allocated to a winner from the Western Provinces, and one prize is allocated to a winner from Ontario, then such regional allocation of the prizes must be disclosed.

 

1. Series of Prizes. For example, if one winner is selected, and the prize is to receive $50 a month for 4 months, care must be taken to ensure that, after the first month, entrants are not made to believe that three $50 prizes remain to be won, when, in fact, they have already been awarded (just not distributed). 

 

1. Early Bird Prizes. When awarding specific prizes to the first entrants of a contest, make sure to disclose the start date of the entire contest (i.e. the date by which people must enter in order to win an early bird prize).

 

1. 5.       The skilling testing question requirement (if applicable);

 

1. Any important information relating to the chances/odds of winning.  For example, if the odds depend on the number of people who enter the contest, this fact should be disclosed. Similarly, if contest winning tokens are placed inside specially marked products, the number of winning tokens available to be found should be disclosed; and

 

1. The contest closing date.

 

The responsibility to provide all of this information rests on the person/entity conducting the contest. A consumer should not have to be inconvenienced in any way in order to obtain the basic information relating to the contest. Also, in a contest involving a particular product, a consumer should not have to buy the product to read the contest rules associated with it. Instead, a short list of the contest rules (at a minimum, numbers 1, 2, 5, 6, and 7 from above) should be disclosed on the outside of each product package.

In addition to the above, the Act requires contest promoters to select participants, and distribute prizes, randomly or on the basis of skill. Also, the distribution of prizes cannot be unduly delayed.

Failure to comply with any of the above may result in a court ordering the entity or individual to cease engaging in the conduct, to publish a corrective notice and/or to pay an administrative monetary penalty.

In addition to complying with the Act, contests must be lawful as they relate to other federal and provincial laws. The Criminal Code, and the possible requirement of a gaming license, should also be considered whenever a person (or business) wishes to conduct a contest.

Jennifer Brigandi is an Associate in the Business Law Group of Tierney Stauffer LLP. If you require further details, or require a lawyer to review or draft your promotional contest rules, please contact Jennifer at (613) 288-3221 or jbrigandi@tslawyers.ca.

This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions.