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  • Writer's pictureFroese Law

Launching a Legally Compliant Contest

Updated: Oct 17, 2023

Contests are a great way of advertising your business and, with the rise of social media, it has never been easier to reach such a big audience. Contests are a great way to garner attention and divert potential customers to your brand. Not only can this led to an increase in sales, it may also help build up a client list and pinpoint where your brand will be most successful. However, creating the perfect contest is not your only consideration. There are also an array of different laws that regulate the use of contests that need to be followed. In order to ensure that your contest is legal, you should familiarise yourself with the various laws. Here is a breakdown of the key provisions that you need to be aware of: Competition Act

The Competition Act is a federal piece of legislation that ensures fair competition across the marketplace. This includes the regulation of contests. The Act highlights that in order to be legal, each contest needs to disclose the number and approximate value of prizes, the area of which they relate and any fact that may materially affect the chances of winning. It also stipulates that prizes should be given without undue delay. All of these requirements can be easily dealt with through a set of rules that are published alongside the contest. Criminal Code The Criminal Code also federally governs the legality of contests. The Code prohibits illegal lotteries. A legal lottery has been defined as having 3 main elements: 1) a prize 2) chance and 3) consideration. In order to avoid violating, the Criminal Code, there are numerous things that can be done. Canada’s Anti-Spam Law (CASL) Oftentimes, contests are promoted through digital marketing campaigns, that include emails. Careful consideration of CASL should be factored. This is an important piece of legislation that intertwines with the creation of a contest. It is important to be aware of these rules as a failure to comply can led to $1 million fines for individuals or $10 million fines for corporations. CASL regulates the need for consent to send electronic messages, the ability to unsubscribe and opt out and identification requirements. Intellectual Property Intellectual property considerations may arise in numerous instances. One such consideration is the need to ensure that you are not using a trademark of another company. If you are found to have done so, you may be liable under the Trademark Act. Also noteworthy is deciding who gets copyright ownership of writings or art submitted into a contest: whether it should stay with the contestant or be transferred over to your brand for your use. Contract Law It has been held in numerous cases that a contractual relationship is established between the creator of the contest and the contestants as soon as the public offer has been accepted and responded to by the contestant. A breach of this contract may result in liability which may lead to compensation being paid out. Therefore, it is important that you have the means to fulfil the contest otherwise you will be liable for breach of contract. Social Media Policies As most contests are now run within social media platforms, it is important to take time to familiarise yourself with the platform you are using. Each social media platform may have completely different rules relating to contests. It is therefore essential that, before any contest is posted, that the terms of use for each platform is analysed to ensure compliance. A failure to do so can led to the account being terminated or taken down by the platform. This could be very costly as you may need to start your social media presence from scratch. Privacy and Data Protection An important area of law in relation to contests is privacy and data protection. When crafting your contest there are a few things that specifically should be borne in mind: what type of information you will be collecting, how it will be stored and where the contests will be from. The law that governs data protection in Canada is PIPEDA. However, if the contest is online you may have contest entries from all over the world therefore falling under other data protection laws. A good way to ensure compliance with data protection regulations is through a strong privacy policy statement that will be easily accessible for contestants.

A failure to comply with these laws can led to both criminal and civil liability. So it is important that your contest is both successful but also legally compliant. Because of the different number of laws this can be a very daunting task, but if you get into the routine of checking off each of these laws and ensure that your employees are aware of the laws then it will become instinctive.

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