TAMING OF THE CONTEST BEAST: How to Avoid Contest ... The Contest Beast - Presentation.pdf ·...

TAMING THE CONTEST BEAST:How to Avoid Contest Catastrophes and

Create a Winning Promotion!

CMA’s Regulatory Affairs Conference for MarketersToronto, Ontario

September 22, 2005

Taming the Contest Beast – September 22, 2005

Participants

ModeratorBill Hearn, Partner, McMillan Binch Mendelsohn LLP

PanelistsSteven A. Kahansky, Associate General Counsel, Tim Hortons

Duncan McCready, Executive Vice President, IC Group Inc.

Pierre Savoie, Partner, Legault Joly Thiffault

Rick Shea, Director, Marketing & Client Services, Resolve Corporation

Vandana Taxali, Advertising and Marketing Lawyer

Materials prepared by Jeff Scanlon, McMillan Binch Mendelsohn LLP

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AGENDA

• Legal Framework in a Nutshell • Interactive Panel Discussion (Contest

Scenarios)• Questions

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TOOLBOX OF MATERIALS

• Contest Law Primer• Appendices

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http://www.dgsgardening.btinternet.co.uk/toolbox.JPG


THE STARTING POINT

• Primary objectives are usually to sell products and services, drive traffic to websites and develop consumer databases

• Creative is King!• But don’t give short shrift to legal compliance

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THE STAKES ARE HIGH!

• Canada: Rogers Video – Win a Film Fantasy

“whisked off to a secret training base” where “contract mercenaries and Green Berets teach you all the skills you’ll need to survive a 3-day paramilitary covert mission in hostile territory.”

• United States: Pepsi – “Play for a Billion Dollars” Sweepstakes

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CONTESTS AND THE CRIMINAL CODE

The Skill-Testing Question

• Paragraphs 206(1)(a) to (d) of the Criminal Code prohibit schemes for disposing of property by “any mode of chance”

• Supreme Court of Canada has clarified that only games of “pure chance” are prohibited

• A proper skill-testing question converts a game of pure chance into a game of mixed chance and skill

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“No Purchase Necessary”Section 206(1)(f) of the Criminal Code makes it an offence to

dispose of any goods, wares or merchandise by any game of chance or any game of mixed chance and skill in which the contestant or competitor pays money or other valuable consideration

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• PenaltyIndictable offence punishable by imprisonment for a term not exceeding two years

ORsummary conviction offence punishable by a fine not exceeding $25,000

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CONTESTS ANDTHE COMPETITION ACT

• Full Contest Rules: Adequate and Fair Disclosure

Number and approximate value of prize;Area or areas to which they relate; andAny fact within the knowledge of the contest sponsor that materially affects chances of winning.

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CONTESTS ANDTHE COMPETITION ACT

• Short List Disclosure in Ads:PackagingPoint-of-SaleBillboardsTVRadioInternet

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CONTESTS AND THE COMPETITION ACT

• Competition Bureau’s Program of Binding Written Opinions

$1,000 fee2 weeks for “simple” contests6 weeks for “complex” contests

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CONTESTS AND THE COMPETITION ACT

• Current PenaltiesIndividuals:

- Up to $50,000 for the first infraction- Up to $100,000 for subsequent infractions

Corporations: - Up to $100,000 for the first infraction- Up to $200,000 for subsequent infractions

Publication order/notice• Proposed Penalties

Individuals – up to $750,000Corporations – up to $10 millionRestitution for consumer loss

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CONTESTS AND QUEBEC

• Additional RequirementsAll materials for Quebec residents must be in FrenchNotice of the contest, together with the applicable duties, a copy of the contest rules, and the text of any advertisement used in the contest must be filed in advance with the RégieDuties based on the value of prizes available to Quebec residents must be paid in advanceThe contest rules must contain certain prescribed informationIn certain cases, a security bond with the Régie may be required

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CONTEST SCENARIOS

Rick SheaDirector, Marketing &

Client Services Resolve Corporation

Duncan McCreadyExecutive Vice-President

IC Group Inc.

Vandana TaxaliAdvertising and

Marketing Lawyer

Steven A. KahanskyAssociate General Counsel

Tim Hortons

Pierre SavoiePartner

Legault Joly Thiffault

ModeratorBill Hearn

Partner McMillan Binch Mendelshon LLP

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SCENARIO ONE

Contest sponsor would like to charge contestants a fee or force a purchase to enter its contest.

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SCENARIO ONEDiscussion Points

• R. v. Balance Group International Trading Ltd.(Ont. C.A., 2002)

“Crane Game” case Trial judge held that crane game was mixed game of chance and skill

Ontario Court of Appeal affirmed

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SCENARIO ONEDiscussion Points

• Test for defining games of mixed chance and skill set out in R. v. Ross, Banks and Dyson, SCC 1960:

“…when the statute speaks of chance as opposed to skill, it is clear that it contemplates not the unpredictables that may occasionally defeat skill but the systematic resort to chance involved in many games such as the throw of dice, the deal of cards.” (Per Pigeon J.)

• Remember: paragraph 206(1)(e) of the Criminal Code applies to games of pure skill!

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SCENARIO TWO

Contest sponsor has heard stories of contest disasters and wants to manage contest risks prudently.

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SELECTED CONTEST MIX-UPS

• Ultramar (Canada) 2001

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SELECTED CONTEST MIX-UPS• McDonalds (US and Canada), 2001

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SCENARIO TWODiscussion Points

• Promotional partnership agreements• Contest rules• Other promotion risk management

processes and products

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SCENARIO THREE

Contest sponsor is designing an online contest for which all Canadians are eligible to enter. There is no “age of majority” eligibility threshold. The contest sponsor is collecting information from entrants such as their address, age, profession, shopping habits and income bracket. The entry form provides that entrants will receive an additional entry if they “tell a friend” about the contest.

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SCENARIO THREEDiscussion Points

• PIPEDA in force in Ontario since January 1, 2004

• CMA Code of Ethics and Standards of Practice re Marketing to kids and teens

• Quebec’s An Act Respecting the Protection of Personal Information in the Private Sector

• Depending on structure, “tell-a-friend” schemes raise consent issues under PIPEDA

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SCENARIO FOUR

Contest sponsor is running a contest to award a car prize that is open to all Canadians. Entrants can participate only by filling out a ballot at participating stores located in Ontario. There is no on-line method of entry.

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SCENARIO FOURDiscussion Points

• When must a contest sponsor file with the Régie?

• Main requirements for Quebec contests

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SCENARIO FIVE

Contest sponsor does not want to clutter creative in contest ads with legalese and so is reluctant to include contest details on packaging or other ads.

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SCENARIO FIVEDiscussion Points

• Competition Bureau’s “Short List” Disclosure Requirements:Number and ARV of prizesRegional Allocation of PrizesChances of Winning Skill-Testing Question Date Contest ClosesNo Purchase NecessaryWhere Full Contest Rules Available

• Space permitting, other items may be included for good reasons other than compliance with Competition Act

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Radio Short-Form Disclosure

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Tim Hortons “Roll Up the Rim to Win”

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Esso Contest – Recent Contest

At Roadside At Pump31


Esso Contest – Recent Contest

At Counter32


SCENARIO SIX

Contest sponsor wants to drive traffic to its website and so wants to run a sweepstakes where entrants may only enter on-line.

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SCENARIO SIXDiscussion Points

• Same basic laws apply• Bureau’s February 2003

Information Bulletin re: Representations on the Internet

• Special risks to manage:jurisdictional issuesglitch disclaimerlimit number of entries and eligibility

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WRAP-UP

• Contest scenarios are not exhaustive• Money other hot spots, such as

deceptive prize noticescross-border contests involving US residents

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WRAP-UP

• Avoid common hazards• Address regulatory concerns• Address contractual concerns• Skipping legal advice may be false

economy

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Questions?

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TAMING OF THE CONTEST BEAST: How to Avoid Contest ... The Contest Beast - Presentation.pdf ·...

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