Humans are naturally drawn to corporate contests, such as Tim Horton’s Roll Up The Rim To Win® or McDonald’s restaurants’ MONOPOLY® game. Advertising contests such as these have long been used to promote business interests and drive public attention. With the advent of the Web, many of these contests have moved online and some now include user-generated content (UGC).

Contest organizers who choose to host their contests online and exploit UGC must abide by all the traditional legislative regimes designed to ensure fairness, transparency and legality of such contests. They must also pay strict attention to the additional complexities that stem from the online nature of the contest.

Statutory Requirements

Contests held to promote a particular corporation are subject to regulation at both the federal and provincial level. Relevant federal statutes include the Competition Act, Criminal Code, and Personal Information Protection and Electronic Documents Act (PIPEDA).

Competition Act

The Competition Bureau has taken the position that the Competition Act provisions pertaining to false or misleading representations apply to Internet contests. Therefore, the same basic rules that govern traditional marketing practices apply to online contests, including the requirement of fair disclosure and the prohibitions on false and misleading advertising. The disclosure requirements include number and approximate value of the prizes, odds of winning, regional allocation of prizes, and contest closing date.

For contest disclaimers, the Competition Bureau states that it is not sufficient for contest disclaimers to be present. These disclaimers must also be “likely to be read.” In determining whether a contest disclaimer is sufficient, the Competition Bureau looks at its location on the website, page layout, use of attention-grabbing devices, size of font, accessibility to users, and the appropriate use and location of hyperlinks. To ensure transparency and fairness for contestants, contest organizers should pay particular attention to these areas.

The Criminal Code

The trend in online contests is to require contestants to submit an artistic product: video, slogan or theme music. The Criminal Code contains a provision prohibiting the disposal of any “goods, wares or merchandise” by way of any contest in which contestants pay money or “other valuable consideration.” The development and submission of UGC by contestants would likely be considered “other valuable consideration.” To avoid violating the provision in the Criminal Code, contest organizers must provide a non-purchase option.

The Personal Information Protection and Electronic Documents Act

In executing any contest, organizers must adhere to PIPEDA, the federal privacy legislation, and all related provincial privacy legislative regimes. These laws require that contest organizers obtain consent for the collection, use, storage and disclosure of any personal information received through the administration of their contest.

Contestants should be informed, through the contest rules or entry form, of the ways their information will be used. The contest organizers should also advise contestants of their policies and practices relating to information security and destruction of information after the contest has wrapped up.

A common privacy issue that arises in the administration of online contests occurs when contest organizers ask participants to provide personal information about “friends” or other individuals, then use the information without the third party’s consent.

Québec Rules

Contest organizers must meet additional requirements when operating a contest open to Québec residents. The Act respecting lotteries, publicity contests and amusement machines (Québec Lotteries Act) defines “publicity contest” very widely, and includes “any operation that results in the awarding of a prize.” Therefore, contest organizers must be aware of and comply with the requirements in Québec Lotteries Act as well as the Charter of the French Language.

The Québec Lotteries Act imposes duties on virtually all publicity contests permitting participation by Québec residents, and also gives authority to the Régie des alcools, des courses et des jeux to create rules governing publicity contests in Québec.

The contest organizer must pay duties to the Régie, calculated on the value of the prizes and the contest’s geographic participation base. The duties are equal to 10 per cent of the prize value for contests offered to Québec contestants exclusively, 3 per cent for Canadian contests open to Québec contestants and 0.5 per cent for all other contests open to Québec contestants.

Duties are payable upon filing required contest notice forms and contest advertising materials. For non-resident contest organizers, the Régie usually requires security be filed to ensure delivery of the prizes won by Québec residents.

In addition, regulations to the Consumer Protection Act set out mandatory content for the contest rules, and include contest notice, document retention and reporting requirements.

Finally, the Charter of the French Language legislates that all contest materials, including the contest rules and advertising, must be made available in French. A version of the rules or advertising in another language may also be published, provided that it is accompanied by a French version which is at least as prominent as the version in any other language.

Online Issues

Technical problems

In addition to complying with relevant legislation, a number of unique technical considerations arise in online contests and should be addressed. To minimize exposure for technical problems, contest rules should be drafted to:

  • limit contest organizers’ liability for technical errors, accessibility of the website or inaccuracy of the information provided by the participants; 
  • limit contest organizers’ liability in the event of damage to users’ computers; 
  • address alternative ways to conclude the contest upon a server failure or inability to judge UGC contributions due to technical malfunction or issue; and 
  • address issues surrounding the number of times a contestant can enter, as well as the age and geographic location of the contestant.

UGC considerations

If the organizer of the online contest intends to use UGC, a number of potential minefields must also be avoided. The following could all land contest organizers in hot water: soliciting or publishing submissions that disparage individuals, other companies or population groups, or submissions that depict unsafe or illegal activities or infringe copyright.

As mentioned in a previous TLQ article, Subway is currently suing Quiznos over a contest in which Quiznos invited the public to submit home-produced videos depicting Quiznos’ sandwiches as superior to Subway’s. We continue to monitor the progress of the Subway case to see if it will impact the extent a website can shape solicited UGC entries.

In another case, Fair Housing Council of San Fernando Valley v. Roommates.com LLC, the operator of a roommate-matching website was sued for violating housing discrimination laws. The website asks the subscriber a series of questions, including some about the person’s sex and sexual orientation, then assembles a profile based on the responses. A US appeals court found that because the website operator materially contributed to the creation of a subscriber profile and was therefore an “information content provider,” the operator was not entitled to immunity under the Communications Decency Act of 1996.

While the Fair Housing Council case did not involve an online contest, it did involve an aspect of UGC and represents a possible shift in the courts’ interpretation of what constitutes an “information content provider.”

McCarthy Tétrault Notes:

Jurisprudence in the areas of online contests and UGC continues to develop. Against this changing landscape, contest organizers capitalizing on the popularity of UGC by using it in contests would be advised to:

  • avoid contests that pit the sponsor’s product against that of a competitor’s; 
  • provide tools that are neutral, such as technology platforms and online editing capabilities; 
  • provide general contest parameters outlining the ad campaign’s subject matter, judging guidelines and technical requirements, but avoid specific examples in an attempt to guide the contestants; and 
  • include prohibitions in the contest rules on false, misleading, defamatory or fraudulent content.