Social media contests, sweepstakes, and giveaways have grown increasingly popular in the past few years and have become a common marketing strategy for businesses. From "like and share this post" to "tag five friends for extra entries," contests allow businesses to promote their brand, generate leads, and engage with current and new customers. While it may be fun and games for the entrants, businesses need to be mindful of the rules regulating promotional contests.
Regulation of promotional contests in Canada
In Canada, social media promotional contests are mainly governed by the Competition Act (the Act). Section 74.06 of the Act is specifically aimed at promotional contests and it requires contest organizers to provide adequate and fair disclosure to the contest entrant of the following details:
- The number and approximate value of prizes;
- The area(s) to which they relate (i.e., any "regional allocation" of prizes); and
- Any fact within the knowledge of the person that materially affects the chances of winning (i.e., odds of winning).
All required disclosures must be displayed in a way that they are likely to be read. If there are any point-of-purchase materials used in the contest, these should include short/mini rules covering the required disclosures. In addition, businesses should ensure that a full and detailed version of their contest rules are made available on their website.
Section 74.06 of the Act also requires contest organizers to distribute the prizes without undue delay. Other general misleading advertising provisions of the Act also apply when operating a contest. For instance, section 52.1(3) of the Act prohibits organizers from conducting a contest where the delivery of a prize is or is represented to be conditional on prior payment. Section 53 of the Act also prohibits deceptive notices of winning a prize through electronic or regular mail.
In addition to the Act, businesses should be aware of sections 206 and 207 of the Criminal Code which govern illegal lotteries. Games of pure chance, such as random draws or "instant win" games, are considered to be illegal lotteries and thus prohibited unless certain exceptions apply. It may also be considered an illegal lottery to require entrants to pay money or other valuable consideration in order to play. This applies for games of pure chance and mixed chance and skill. Valuable consideration does not have to be monetary in value. Rather, it can include actions which have value, such as requiring the entrant to complete a survey (i.e., personal information).
There are additional requirements in place for operating promotional contests in Québec, such as registering the contest with the Régie des alcools, des courses et des jeux (RACJ). Businesses looking to extend their contest in Québec should consult the RACJ for more details.
Canada's Anti-Spam Legislation (CASL) requires express or implied consent to send commercial electronic messages. Businesses typically collect entrants' email addresses during a contest for subsequent marketing. In these circumstances, it is important to ensure that CASL's consent, identification, and unsubscribe requirements are met.
Additional CASL issues may arise depending on the type of promotional contest being held. For instance, contests which contain a survey component or a "refer a friend" element may attract further CASL considerations. Organizers must be mindful of these CASL requirements when implementing these features.
Different rules for different platforms
Apart from the legislative requirements, businesses should keep in mind that social media platforms typically contain promotion guidelines of their own, and these may differ depending on the platform of choice.
Promotional contests, sweepstakes, and giveaways are a great way to promote a brand and engage with current and potential customers. Extra care must be taken by organizers to ensure their contest aligns with the legislative requirements of the Competition Act, the Criminal Code, and Canada's Anti-Spam Legislation, as well as the conditions set forth by the social media platform(s). Businesses should also consider seeking legal advice on drafting and reviewing the contest rules to ensure compliance.
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