Contest calamities

It goes in cycles: Things have been going smoothly for years for contests and now they've turned sour again. There's the Ultramar 'Reveal a Deal' disaster and for example other contests imploding behind the scenes.

It goes in cycles: Things have been going smoothly for years for contests and now they’ve turned sour again. There’s the Ultramar ‘Reveal a Deal’ disaster and for example other contests imploding behind the scenes.

The Ultramar promotion ran in the Maritimes and involved game cards with a hidden prize message – the majority of the prizes were Ultramar gas coupons, and three projected Grand Prizes, each consisting of $1,500 worth of fuel. But the printing company mistakenly ran off 100,000 Grand Prize-winning game cards. The error was quickly discovered when service stations reported multiple Grand Prize-winners in the contest’s opening hours.

Ultramar invoked a clause in the contest rules that allowed it to terminate the contest if ‘due to a printing or production error more than the advertised number of prizes are claimed.’ The three Grand Prizes will now be awarded by random draw. This contractual exit strategy averted Ultramar’s potential liability for millions of dollar in gasoline. It did not, however, avoid the public relations problems – Ultramar had hundreds of instant Grand Prize ‘winners’ who were instantly deprived of their prizes. The company ran ads to explain the situation but it’s difficult to take something away from your customers without residual bad feelings.

There is a reason behind the increasing number of contest disasters. Contests tend to cause relatively minor problems, if at all, and marketing people take them for granted. The quality of contest planning begins to deteriorate; contest rules are left to a junior to draft and sooner or later a promotion goes wrong and the industry pays closer attention for a while.

I knew we were in the danger zone several weeks ago when a client announced that a skill-testing question was only required for prizes of more than $100. The skill-testing question requirement comes from the Criminal Code. Would this client have assumed that there was a minimum threshold for bank robbery, for example?

Ultramar, as it happens, did everything right. It was the printing company that made the ‘unfortunate error.’ Ultramar, fortunately, had the clause in its contest rules allowing it to terminate the contest. Never forget that contests establish a contract between the sponsor and participants. If something goes wrong with a contest, the ability to salvage the situation depends completely on the contract terms as set out in the contest rules.

But the Ultramar promotion differs from the typical disaster in that the contest rules anticipated the problem. Usually when something goes wrong with a contest, the rules have not included the minimum safeguards – such as a clause allowing the sponsor to terminate the contest or change the contest rules at any time without notice – or, a lawyer’s nightmare, the rules could not have anticipated the problem. The problem, in fact, is a clever or unscrupulous contestant.

When you devise a promotion in good faith, you cannot assume all participants will share your bona fides.

Two examples: The Children’s Hospital of Eastern Ontario recently held a fund-raising lottery. Tickets cost $100 and the Grand Prize was the proverbial ‘dream home.’ After the Grand Prize-winner was selected the cheque he had written for the $100 ticket, bounced. This was not an ‘unfortunate error.’ The lottery’s rules did not anticipate a winner who had entered for free. And not suprisingly, he was quite prepared to pay for his ticket after the fact. He won the dream home and other participants were justifiably annoyed. In the future, similar lotteries will certainly include an NSF cheque provision in their rules.

The top prize for the ‘cleverest contestant’ should go to a Mr. Johnson of California. In 1989, BP Oil ran a contest called ‘Licence Plate Jackpot.’ Every week, a randomly selected licence plate number was posted in BP service stations. If your licence plate number exactly matched the posted number, you could win a new BMW 325.

Mr. Johnson used public records to track down the owner of a car with one of the winning licence plates. He bought the car (a clunker) for $650 and used it to claim the BMW. The promotion house learned of these manoeuvres and claimed that Johnson’s claim was not ‘legitimate’ within the meaning of the contest rules. The case went to trial. The court found that a reasonable person applying the official rules to these facts could not conclude that Johnson had failed to meet the ‘obtain legitimately’ provision. Johnson was awarded the BMW.

There is no way to avoid this kind of disaster. You could hire a ‘professional contestant’ as an advisor, but human ingenuity knows no bounds and no set of contest rules is completely bullet-proof. All contest rules, however, should cover the predictable disasters so that, like Ultramar, you can limit your potential damages.

Susan Vogt practises marketing and trademark law at the Toronto offices of Gowling Lafleur Henderson LLP. She can be reached by phone at (416) 862-5439 or by e-mail at susan.vogt@gowlings.com.