Deceptive Notice of Winning a Prize (Section 53 of the Competition Act)

Backgrounder

June 21, 2002

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New Criminal Offence

The deceptive notice of winning a prize provision (section 53) creates a new criminal offence that prohibits the sending of a notice that gives the recipient the general impression he or she has won a “prize” and the recipient is asked or given the option to pay money or incur a cost in order to obtain the prize. The provision applies to notices sent by any means, such as regular or electronic mail. The proposed amendment takes a balanced approach to capturing improper conduct without impeding the legitimate practices of law-abiding enterprises.

New Disclosure Requirements

Section 53 also sets a “code of conduct” for businesses who wish to use this type of promotion for their commercial activities. No offence would arise if the recipient actually receives the prize and the person who sent the notice provides fair and adequate disclosure of the following:

• the number and approximate value of prizes or benefits;
• the area or areas, to which they have been allocated; and
• any fact that materially affects the chances of winning.

Section 53 also requires that the person who sent the notice:

• distribute prizes without unreasonable delay; and
• select participants or distribute prizes randomly or on the basis of participants’ skill, in any area to which the prizes or benefits have been allocated.

Due Diligence

A corporation is responsible for the actions of its employees and agents, unless it can establish that it exercised due diligence to prevent the commission of the offence. Officers and directors of a corporation in a position to direct or influence the policies of the corporation in respect of the offending conduct may be charged as parties to the offence and found guilty unless they establish that they exercised due diligence to prevent the offence.

Offence and Punishment

Any person who contravenes section 53 is guilty of an offence and liable:

• on conviction on indictment, to a fine in the discretion of the court or to imprisonment for a term not exceeding five years, or to both;
• on summary conviction, to a fine not exceeding $200,000 or to imprisonment for a term not exceeding one year, or to both.

Guidelines

The Competition Bureau will issue a draft guidelines which set out the Bureau’s approach to the administration and enforcement of these provisions. There will be consultation on these guidelines before they are finalized. Anyone interested in obtaining a copy of the guidelines or providing comments, may do so by calling the Bureau’s Information Centre at: 1-800-348-5358 or 819-997-4282.