Travel Certificate Products

In January 2005, a company that distributes and sells travel certificate products returned to the Bureau for a second opinion on whether a proposed multi-level marketing plan would raise concerns under the Competition Act. The company had made changes to its original marketing plan following the Bureau's first negative opinion in November 2004.

The Bureau examined the proposal under sections 55 and 55.1, the multi-level marketing and pyramid selling scheme provisions of the Act. In April 2005, it provided a positive opinion on the grounds that the revised plan appeared to comply with the requirements of the Act. The Bureau's positive opinion was based on its findings that:

• the company could provide a typical earnings statement since it had previously operated a plan selling the same products;
• the company determined that participants earning between US$1,600 and US$3,200 accounted for the largest number of participants in the plan;
• the company assumed responsibility for updating the typical earnings statement when data for the current plan became available within a maximum time frame of one year;
• in this specific case, the $300 personal business volume sales requirement to become a qualified independent distributor and the $75/$50 minimum sales threshold to maintain this status did not create a sufficiently strong inducement to purchase the product and therefore did not create a de facto purchase requirement;
• professional advancement was based on the building of sales volume in individual lines, meaning that increased levels of participation were based on sales volumes and not the recruitment of participants into the plan.