Competition Act (R.S.C., 1985, c. C-34)

Marginal note:Definition of scheme of pyramid selling

• 55.1 (1) For the purposes of this section, scheme of pyramid selling means a multi-level marketing plan whereby

  • (a) a participant in the plan gives consideration for the right to receive compensation by reason of the recruitment into the plan of another participant in the plan who gives consideration for the same right;

  • (b) a participant in the plan gives consideration, as a condition of participating in the plan, for a specified amount of the product, other than a specified amount of the product that is bought at the seller’s cost price for the purpose only of facilitating sales;

  • (c) a person knowingly supplies the product to a participant in the plan in an amount that is commercially unreasonable; or

  • (d) a participant in the plan who is supplied with the product

    • (i) does not have a buy-back guarantee that is exercisable on reasonable commercial terms or a right to return the product in saleable condition on reasonable commercial terms, or

    • (ii) is not informed of the existence of the guarantee or right and the manner in which it can be exercised.

• Marginal note:Pyramid selling

  (2) No person shall establish, operate, advertise or promote a scheme of pyramid selling.

• Marginal note:Offence and punishment

  (3) Any person who contravenes subsection (2) is guilty of an offence and liable

  • (a) 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; or

  • (b) on summary conviction, to a fine not exceeding $200,000 or to imprisonment for a term not exceeding one year, or to both.