What laws govern promotional contests (sweepstakes) in Canada?
Promotional contests in Canada (commonly referred to as “sweepstakes” in the United States) are primarily governed by the federal Competition Act, section 206 of the federal Criminal Code and contract law.
In addition, in Canada, the province of Quebec has a separate regulatory regime governing contests, which, in general, requires filings to be made to the Régie des alcools, des courses et des jeux, together with a duty (the amount of which varies according to the value of prizes and where they will be available, though commonly not significant) and copies of the contest rules and advertising.
In this blog, we share things you should know and to do when advertising to Canadians.
Things to know
- Contests are primarily governed by the federal Competition Act and Criminal Code. The misleading advertising provisions in provincial consumer protection legislation also apply to contest advertising.
- Contests must have a set of written rules, disclosing at least the minimum disclosure requirements set out in the Competition Act.
- The Criminal Code prohibits awarding prizes solely on the basis of chance or requiring a participant to pay money or other valuable consideration in order to participate in the contest or draw if the prize is goods, wares or merchandise.
- Most contests include a no-purchase form of entry and require the winner to answer a skill-testing question to avoid these issues.
- Companies running contests wholly or partly in Quebec must register the contest with the government. This includes paying duties, posting security, and reporting the list of winners.
- Employee contests may raise tax reporting implications.
- The collection and use of contestants’ personal information for marketing purposes requires informed consent under privacy laws.
Things to do
- Ensure your contest rules set out the minimum disclosures required by the Competition Act.
- Include a no-purchase entry option and a skill-testing question, if necessary.
- Register promotional contests that are open to residents of Quebec.
- Ensure the contest rules are readily available to contest participants. Ensure that, at a minimum, “mini rules”, including a web site link to the full rules, are included in all contest advertising.
- Obtain appropriate consent for any subsequent marketing activities to the contestants.
What are the potential penalties for non-compliance?
Given that the improper operation of a promotional contest can lead to civil and/or criminal liability under the Competition Act, the Criminal Code, based on a contractual (i.e., common law) challenge or failure to comply with Quebec’s regulatory requirements, among other laws and rules, it is important to review contests for legal compliance.
At LS Consultancy, we provide a cost-effective and timely pre-publication advice to make sure all your advertising and campaigns are compliant, clear and suitable for their purpose.