“… I want to talk about deceptive practices. The amendment to prohibit deceptive prize notice addresses unscrupulous promoters who mislead their victims into believing they have won a prize without disclosing the excessive costs associated with collecting the prize. The Commissioner has testified that this is a growing problem in Canada and the Bureau, quite literally, receives thousands of complaints each year.”
(Former Minister of Industry, Brian Tobin, Remarks to House of Commons, 2001)
Overview of Deceptive Prize Notice Provisions
In addition to “general” civil and criminal misleading advertising provisions, the Competition Act (the “Act”) also contains a number of other provisions that prohibit or regulate specific types of advertising and marketing practices.
These include a criminal deceptive prize notice provision (section 53 of the Act), which was enacted in 2002 to address a significant number of deceptive prize notice complaints that the Competition Bureau (the “Bureau”) was receiving.
Section 53 prohibits prize notices sent by electronic or regular mail that give the general impression that a recipient has won (or will win) a prize and requires a payment (or incurring another cost) unless the recipient actually wins the prize or benefit and certain disclosure and other requirements are satisfied by the sender.
These include adequate and fair disclosure of the number and approximate value of prizes, regional allocation of prizes and any fact within the sender’s knowledge that materially affects the chances of winning (i.e., odds of winning). In addition, the distribution of prizes cannot be unreasonably delayed and there are requirements for the selection of participants and distribution of prizes.
Persons that violate section 53 are liable to fines, on summary conviction, of up to $200,000 and/or imprisonment for up to one year and, on indictment, to fines in the discretion of the court and/or imprisonment for up to 14 years. Several due diligence defences are, however, available under this offence.
The Bureau has issued a number of guidelines setting out its position on the enforcement of section 53, which include enforcement guidelines (Deceptive Notices of Winning a Prize: Section 53 of the Competition Act) and several pamphlets (Deceptive Prize Notices and Is Someone Giving You a Generous Gift? Think Again!) (see links below).
LINKS AND RESOURCES
Legislation: Competition Act – Competition Bureau: Enforcement Guidelines: Deceptive Notices of Winning a Prize: Section 53 of the Competition Act, Application of the Competition Act to Representations on the Internet – Bulletins: Corporate Compliance Programs – Pamphlets: Deceptive Prize Notices, Is Someone Giving You a Generous Gift? Think Again!
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