As the No-Prize evolved, it was distinguished by its role in explaining away potential continuity errors. Rather than rewarding fans for simply identifying such errors, a No-Prize was only awarded when a reader (often using hilariously tortured logic) successfully explained why the continuity error was not an error at all.
When readers began pressuring Marvel to start giving out a similar prize, Stan Lee instituted the "no-prize," which was awarded to a reader who first spotted a mistake, or came up with a plausible way to explain a mistake that many other people spotted, or made some great suggestion or performed a service for Marvel in general. Originally, the "prize" was nothing more than Lee publishing the letter in his "Stan's Soapbox" column and informing the letter-writer that he or she had won a no-prize, which was actually nothing.
Although the No-Prize had been intended by Lee as a reminder for his readers to "lighten up" and read comics for pleasure rather than for prizes, the no-prize soon became very popular, and recipients of the "award" began to write Stan and ask him why they had not received an actual prize. In response, Lee began mailing No-Prize winners empty envelopes that said "Congratulations, this envelope contains a genuine Marvel Comics No-Prize which you have just won!"
In 1986, After a few years of this, editor Mark Gruenwald informed readers that his office would no longer award No-Prizes to anyone. The amount of No-Prizes given out after this plummeted, and before long they were eliminated altogether.