Cash back incentive program

A company that markets promotional programs to retailers requested a written opinion on an incentive program. Under the proposed program, retailers would offer prospective customers, as an incentive to complete a purchase, a "cash back" certificate redeemable three years from the date of purchase.

In the opinion, the Commissioner was concerned that representations made in the marketing materials could cause retailers who bought into the program to make false or misleading representations to the public regarding the "cash back" vouchers, including:

• the length of time before consumers could make a claim;
• the rules to qualify for "cash back";
• the number and variability of factors affecting the size of "cash back" refunds;
• the extent to which liabilities would be covered by insurance;
• comparisons suggesting that the program would operate "like insurance"; and
• suggestions that the program was based on proven actuarial data and statistics.

In the opinion, the Commissioner identified that these issues could raise concerns under both the criminal and civil misleading representations provisions of the Competition Act, s. 52.(1) and s. 74.01 (1)(a).

(3099191)